RETAIL INDUSTRY American Eagle soars after refocusing

The retailer's stock price more than doubled as it regained its fashion sense.
PITTSBURGH (AP) -- Teen clothing retailer American Eagle Outfitters Inc., which stumbled last year trying to be too cool, is winning back its fickle customers.
American Eagle outdistanced the competition in August, having abandoned bare midriffs and low-rise pants and returned wholeheartedly to its classic preppy looks of denim and rugby shirts -- which happen to be fashion's current trend.
"I think even their management is surprised with themselves and the home run they just hit," said Jennifer Black, head of Jennifer Black & amp; Associates, an independent research firm in Lake Oswego, Ore. "You only see this once in a while where a company steps on the gas, hits all the cylinders and just flies. They are really flying."
Wall Street is happy with the company's turnaround. American Eagle's stock is trading at about $37 a share, not far from its 52-week high of $38.22 and well above its 52-week low of $14.44.
In August, when the overall retail industry posted an anemic 1.1 percent sales pace, the Warrendale, Pa.-based chain enjoyed a nearly 24 percent surge in same-store sales from a year ago. Same-store sales -- sales at stores opened at least a year-- are considered the best indicator of a retailer's health.
Problems
American Eagle executives said part of their problems last year came from trying to be too far out front, predicting what customers would want to wear but not actually asking them.
"You can't get ahead of these kids; you've got to be in step," said Susan McGalla, executive vice president and chief merchandising officer at American Eagle. "We are clearly not smarter than our customers."
Last year, American Eagle's clothes were less about the classic all-American athletic look and more about fast-moving and trendy lines. For a retailer that made its image in classic looks, that turned out to be a big misstep -- in August of last year, as students were shopping for the school year, American Eagle reported a 10.4 percent drop in same-store sales. Their stores were also poorly laid out and confusing.
Changes
To remedy the problems, the company put key officers in a position where they would be closer to market testing and research, moving Roger Markfield from the co-CEO job he shared with Jim O'Donnell, and making him vice chairman and president of the company, overseeing merchandising and design.
Analysts say Markfield and McGalla are two big reasons why teenagers are heading to American Eagle stores this year, snubbing many of its competitors including Abercrombie & amp; Fitch Inc. Limited Brands, Gap Inc. and Wet Seal Inc.
"I just think each of us is focusing on what we're good at," McGalla said in an interview. "We have clearer roles in the company. We've redefined the roles where Jim is the CEO of the company and Roger is spending more time in New York with the design team. They are both heavily involved."
American Eagle also simplified its stores and revamped its displays, making the new styles easier to find. Entire tables have been dedicated to polo shirts, whereas last year the company tried to be more of a boutique, with a mishmash of merchandise sharing space.
The overhaul seems to have worked. Teen shoppers said they like this season's clothes, and the fact that it's easier to find what they're looking for inside the stores.
"I don't know why I didn't buy much stuff here last year -- I just bought it somewhere else," said Mark Gilliam, 17. Now, however, "I've found exactly what I've wanted here pretty quick."