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Template designed fo major on-site presentation in Tuscon, AZ

Template designed fo major on-site presentation in Tuscon, AZ

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  • First I’d like to address our Unique competitive Edge – it’s what’s special about AE – and what sets us apart from others. But to truly understand the story behind our competitive edge. I want to spend a few minutes letting you see beyond the front doors of AE. Been w/company over 10 years. $200 M to over $2 B. Amazing years and some difficult times. Learned the most. Best processes evolved. Past 3 years this company grew up dramatically under the leadership of our CEO, Jim O’Donnell. His experience enabled us to balance the present w/the future, the focus and discipline w/flexibility. We now have a Corporate Vision shared by all employees at AE.
  • Speaking of Research…. Independent Research – Teen Research Unlimited Moved up 5 spots to fourth since 2000. We are in great company - behind only Nike and Sony and Abercrombie.
  • As a company, we are sharply focused on the future – and have spent the past year identifying our growth drivers.
  • The “Big Six” Near term – opportunity to expand the AE brand Longer-term – international and new concept – Martin+Osa
  • NPD Very proud From ’03-’05, leapt from just under 7% to almost 13%. #1! Using denim as a role model – applying what we have delivered in denim to other categories Denim 20% of our business. – we’re very proud of this – yet we have a balanced assortment. Leads to Destination AE
  • In a study by IBM & the Center for Retailing Studies, they found that the “person-to-person experience” is the most important factor of customer satisfaction in today’s marketplace. This graph shoes the significance of the person-to-person experience compare to the other elements of the total shopping experience. Need to change AE’s strategy to reflect this information Need to create stronger connections with our customers First step is to develop sales associates’ level of customer service
  • We see this at Pulte Homes as well – the company as a whole tends to dominate the market, this past year they had record sales, record profits, and record customer satisfaction.  Thousands of employees take the survey at the same time at Pulte – yet there are significant differences among the 38 Pulte markets

American Eagle Outfitters (Template design) Presentation Transcript

  • 1. 2006 DISTRICT MANAGER CONFERENCE 2005 Year in Review — 2006 Financial Goals Chris Greco
  • 2. 2005 Year in Review
    • Record sales and earnings – 2 nd straight year
    • Eclipsed the $2.0B sales mark
      • 12/19/05 for the company, 12/26/05 for the stores only
      • East Zone: $1.04B, West Zone: $978M, Canada $173M (USD)
    • 26 straight months of positive comps
    • Highest sales per square foot ever
    • Market cap at approximately $3.8B, it was $2.8B at this point in 2001. The value of the company has increased by 35%!!
    Financial Highlights
  • 3. 2005 Year in Review
    • Total Sales for AE Inc: $2.3B, a 22.8% total increase over LY
    • Comp Sales Increases: Total AE Brand 15.5%
    • Earnings growth near 25% based on consensus)
    • Average Store Volume: $2.5M, highest ever for AE
    • # of Stores at Significant Sales Levels:
      • $3.0M or greater, 235 stores in 2005….128 stores in 2004
      • $4.0M or greater, 85 stores in 2005…...39 stores in 2004
      • $5.0M or greater, 24 stores in 2005……12 stores in 2004
      • Highest volume store ever: 684 La Plaza Mall $9.6M in sales
        • This store made a profit of $4.25M, s 44% operating margin
    Sales and Earnings
  • 4. 2005 Year in Review
    • Historical high of $470 per foot while continuing to increase average store gross square footage by 2%.
    Year $$ per foot Sales per Gross Square Foot
  • 5. 2006 Financial Goals
    • Positive comp of 4 to 8% expected
      • Q1 and Q2 planned to a 5% comp
    • Buying inventory at conservative levels to achieve mid single comp
      • Allows us to chase strong product and drive comp higher than plan
      • Additional comp upside exists through selling at full price, reducing markdowns, and using AUR to increase sales with the same inventory.
      • Limits inventory risk and will reduce workload for stores.
    • Plan to leverage margin overall in 2006, as follows by quarter:
      • Q1: challenging, Q2: stable, Q3/Q4 significant opportunity
    • Markdown rate as a % to sales:
      • 2005 Actual Rate: Upper 20%’s
      • 2006 Target Rate: Mid 20%, 2 to 4% points of leveraging for the year
    Sales and Margin Expectations
  • 6. 2006 Financial Goals
    • AUR: Modest increases planned
    • UPT: Huge opportunity, should look to grow 3 to 5%
    • ADS: based on above, 4 to 6% increases should be achieved
    • Conversion: Continued goal for 1 to 2% improvement each year
      • Conversion Sensitivities:
        • 3% Traffic increase: flat conversion reaches current comp expectation
        • Flat Traffic increase: 1% conversion improvement needed all other things equal)
        • 3% Traffic decrease: 2% conversion improvement needed all other things equal )
    Key Metric Expectations
  • 7. Unique Competitive Edge
  • 8. Competitive Edge Coolest Brands: 12–19 Year Olds) Source: Teen Research Unlimited Fall 2000 Fall 2005 7% American Eagle 7% Pepsi 9% Coke/Gap 11% Tommy Hilfiger 11% Abercrombie & Fitch 13% Old Navy 14% Adidas/Sony 23% Nike Total Brand 6% Adidas 6% Old Navy/Pepsi 6% Coca-Cola 7% Hollister 8% American Eagle 9% Abercrombie & Fitch 9% Sony 22% Nike Total Brand
  • 9. Powerful Growth Drivers
  • 10. Corporate Goal 1: Maximize the AE Brand
    • Here is the detail for AE Brand
    Goal 1 Maximize Existing Businesses Champion: Susan McGalla Goal 2 Build / Maximize AE Direct Champion: Fred Grover Goal 3 Execute Intimates Expansion Champion: Betsy Schumacher Goal 4 Launch AE International Champion: Fred/Chris Fiore AE Brand Vision
    • Separate strategy planning sessions and cascading processes will take place for each goal
  • 11. Growth Drivers
    • Real Estate
    • Destination AE
    • New Intimates Sub-brand
    • ae.com
    Near Term Longer Term AE International Martin + Osa
  • 12. Growth Drivers Destination AE
    •  1 Market Share Position in Denim
    Percent Denim Market Share 12.7% BTS 2004 BTS 2005 10.6% Source: NPD BTS 2003 6.5% Specialty Store Denim Market: 15 – 25 year-olds)
  • 13. 2006 DISTRICT MANAGER CONFERENCE Competitive Edge  Joe Kerin
  • 14. Merchandising Staffing Training Replenishment ATD CONVERSION Scheduling PAYROLL AE Card AE AAP COMP Standards NCWP AE Customer Experience
  • 15. 2006 DISTRICT MANAGER CONFERENCE Competitive Edge — Art Solomon
  • 16. Goal Setting & Measuring Success
    • We need to consider two measurements to determine success.
      • 1st: Continuous improvement over LY
      • 2nd: Comparison to company performance for like stores
      • Like store buckets:
        • Type ATD 2005
        • Regional Mall $ 9.19
        • Street Store $10.00
        • Lifestyle Center $11.80
        • Strip Center $13.53
        • Mills Project $ 7.80
        • Outlet Center $ 9.25
        • AE – US Stores $ 9.29
  • 17. Next Steps and Reporting
    • Deliver to Store Managers at upcoming meetings.
    • Assess 2005 performance and set goals for 2006.
    • Begin to use ATD to diagnose your business and react to findings.
    • Be prepared to coach around specific metrics) that will give the greatest return.
    • Cognos reporting will be available shortly.
    • Enhance KPI calculator including ATD is available.
    • ATD will become part of our reviews in 2007.
  • 18. 2006 DISTRICT MANAGER CONFERENCE Max the Brand
  • 19. Improving the Customer Experience: Customer Satisfaction
    • “Person-to-person experience” is the most important factor of customer satisfaction in today’s marketplace.
    Relative Importance of Key Factors of Customer Satisfaction
  • 20.
    • Executive Coaching
    • Leadership 360 Survey
    • Individual Assessment and Results
    • Individual Coaching/Working Sessions (over 6 months)
    • 360 re-survey after 6 months to determine improvements and continued development focus
    Program “Big Picture” Integrated Culture & Leadership Development Copyright, Five Star Development, Inc.
    • Emerging Leaders
    • Group Working Sessions focused on AE, Region, Cross Functional Improvements Leadership 360 Survey
    • Personal Assessment and Action Planning recommendations
    • Re-survey after 1 year to determine improvements and continued development focus
    Action Plans Field and AE-Wide Region Individual Field and AE-wide and Individual Region Strengths & Challenges Senior Executives and Emerging Leader Strengths & Challenges
  • 21. The Denison Model ─ Review ADAPTABILITY Translating the demands of the business environment into action Are we listening to the marketplace? INVOLVEMENT Building human capability, ownership, and responsibility Are employees committed, engaged, and bought in to our direction? CONSISTENCY Defining the values and systems that are the basis of a strong culture Have we created the systems, structures, and processes that enable our group to execute? MISSION Defining a meaningful long-term direction for the organization Are we providing direction?
  • 22. An Impressive Start…. The best seen across the company! Are employees committed, engaged, and bought-in to our direction? Are we providing direction? Are we listening to the marketplace? Have we created the systems, structures, and processes that enable our group to execute? January 2006
  • 23. For Those Who Thought It Impossible They Were WRONG!!! Flexible Stable Internal Focus External Focus
  • 24. Even with all the good news, there are a few items that you will want to pay attention to so that you can ensure ongoing success
    • 12
    • The Field sees being proactive, responsive, and learning from the internal customer as less important or valued than the external customer
      • Is this acceptable and what problems, challenges, or unintended consequences may this create?  
      • Most research shows the link between customer satisfaction and employee satisfaction and so this is worth discussing.
    • The key challenge for AEO is staying on top of your game and sustaining growth.   Push to ensure mechanisms that:
      • Keep an intense focus on direction, strategy, staying on top of the internal customer and external customer/market.
      • Share and leverage leading practices , continually engaging and developing employees and connecting that to strategy.
    • Consistency scores are very high which can obviously be a good thing. Make sure that you do not get too comfortable with excellent execution. Push yourselves to ensure that you do not become too willing to compromise, and view natural conflict of ideas and strategies as a negative and not being a team player.
      • How skilled are you at constructively disagreeing with each other and at managing conflict?
    Flexible Internal Focus External Focus Stable
  • 25.
    • Executive Coaching
    • Leadership 360 Survey
    • Individual Assessment and Results
    • Individual Coaching/Working Sessions (over 6 months)
    • 360 re-survey after 6 months to determine improvements and continued development focus
    Program “Big Picture” Integrated Culture and Leadership Development Copyright, Five Star Development, Inc.
    • Emerging Leaders
    • Group Working Sessions focused on AE, Region, Cross Functional Improvements Leadership 360 Survey
    • Personal Assessment and Action Planning recommendations
    • Re-survey after 1 year to determine improvements and continued development focus
    Action Plans Field and AE-Wide Region Individual Field and AE-wide and Individual Region Strengths & Challenges Senior Executives and Emerging Leader Strengths & Challenges 21
  • 26. Executive Coaching My Personal “LIVE YOUR LIFE” Tour!
    • Open to improvement — wanting to do better
    • Challenging themselves
    • Seeking candid feedback from others
    • Collaborating with others
  • 27. Congratulations ─ You ROCK! Flexible Stable Internal Focus External Focus