American Eagle Outfitters was founded in 1977 by Jerry Silverman and Mark Silverman, this year is its 40th anniversary.
AEO went public on 1994.
In 2006, the company launched a lingerie sub-brand, Aerie. Aerie is very successful and growing in a steady pace. Aerie ends up to be the only surviving sub-brand of AEO.
The company attempt to expand their market share by venturing into the older adults market through opening sub-brand named Martin + Osa in 2006, closed in 2010; another sub-brand called 77kids in 2008 targeted on 2-10 years kids, closed & sold in 2012.
AEO has a dividend yield of 4.44%, they are giving out $0.125 each quarter, which makes it $0.5 per year. The dividend looks attractive to me, and the stock price is currently trading near its lowest point of the year, which is around $11~$12 (July 2017).
AEO started giving out dividend since September of 2004, with $0.02 per quarter, dividend yield of 0.31% per year. Gradually the company increased their dividend to $0.125, dividend yield of 4.44%.
Although AEO has faced different challenges, they are able to grow & continually expand their business to more than 1,000 stores not only in US, but also in Canada, Mexico, China, Hong Kong, Singapore, Thailand, Israel, Saudi Arabia and several other countries in Asia and Europe.
AEO has 6 stock splits started from the year 1998 to 2006.
Jan 06, 1998 -- 3/2 Stock Split
May 11, 1998 -- 3/2 Stock Split
May 04, 1999 -- 2/1 Stock Split
Feb 26, 2001 -- 3/2 Stock Split
Mar 08, 2005 -- 2/1 Stock Split
Dec 19, 2006 -- 3/2 Stock Split
I got this information from Yahoo Finance.
Let's assume that I bought 1,000 AEO shares on Jan 02, 1998 at $1.75. My initial investment would be:
$1.75 x 1,000 shares = $1,750
After the 3/2 stock split on Jan 06, 1998, my 1,000 shares would become 1,500 shares
After the 3/2 stock split on May 11, 1998, my 1,500 shares would become 2,250 shares
After the 2/1 stock split on May 04, 1999, my 2,250 shares would become 4,500 shares
After the 3/2 stock split on Feb 26, 2001, my 4,500 shares would become 6,750 shares
After the 2/1 stock split on Mar 08, 2005, my 6,750 shares would become 13,500 shares
After the 3/2 stock split on Dec 19, 2006, my 13,500 shares would become 20,250 shares
Remember that my amount of initial investment was 1,000 shares with stock price at $1.75, which equaled $1,750.
How much would my intial investment become, after I hold the stock for 19 years?
The original 1,000 shares had grown to 20,250 shares after 6 stock splits. That means:
if we take the closed price of AEO on July 10, 2017, which is $11.25,
$11.25 x 20,250 shares = $227,812.50
My original investment $1,750 would become $227,812.50 after I hold the AEO stocks for 19 years!!!
This has not included the dividend I receive from Sep 2004 to July 2017 yet!
Some Other reasons why I like AEO:
The company has a very low PE ratio 10.88, and it has no debt.
They have healthy cashflow, even during tough, the company giving out the dividend without discount.
Just like other retailers, AEO is facing the threat of Amazon. Many people shift their shopping habit from going to brick-and-mortar stores to online shopping. AEO planned to shut down its 25-40 brick-and-mortar stores in 2017.
Other economic challenges faced by the company included strong US dollar & global uncertainty. Their international sales will be affected by such issues.
If anyone who is currently living in US, I'm really appreciate if you share with me whether AEO is a popular apparel brand in US, I'm living in Asia, and I'm very curious about it. Thank you (^-^)
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