May 21, 2012, 12:54 PM

American Eagle plans to drop

77kids sells baby and toddler apparel via an e-commerce site and stores.

Lead Photo

American Eagle CEO Robert Hanson says the company will drop its 77kids business.

American Eagle Outfitters Inc. is pulling the plug on its children’s business, 77kids, which includes 22 stores and The company says it’s currently exploring options, including selling all or part of the brand’s assets.

77kids generated an after-tax loss of approximately $24 million on sales of $40 million in fiscal 2011, the company says. American Eagle, No. 65 in the Internet Retailer Top 500 Guide expects to book charges associated with the disposition of 77kids in the second and third quarters.

“Although making this decision is disappointing, it is in the best interest of the company to prioritize and focus our efforts on businesses with the highest return potential,” says Robert Hanson, American Eagle CEO. Hanson was hired in November to replace former CEO Jim O’Donnell, who retired.

For the year ended Jan. 28, American Eagle reported:

  • Web sales of $385 million, up 15.3% from $334 million in 2010.
  • Total sales of $3.16 billion, an increase of 6.4% from $2.97 billion.
  • Comparable-store sales increased 3%.
  • Net income rose year over year 7.9% to $151.7 million from net income of $140.6 million in 2010.

The web accounted for 12.2% of sales in 2011 compared with 11.2% in 2010.

Last week the company announced Joan Hilson, chief financial officer is leaving the company. Scott Hurd, American Eagle’s vice president and controller, will manage the finance team until a successor is appointed.

Hilson will stay on through the end of July to assist in the transition, the company says. She had been with the company for more than six years. No reason was given for Hilson’s departure.

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