In a discussion of its 2009 plans, apparel marketer American Eagle referred to direct marketing ““an important area of growth”. A Securities and Exchange Commission filing sheds some light on how that growth strategy will manifest itself.
During 2008, the company began accepting PayPal as a means of payment within three of its Web sites. It also added 21 destination countries to its list of shipping destinations, bringing its ship-to region up to 62 countries.
Separately, in April 2008 American Eagle introduced a co-branded credit card (the AE Visa Card) and re-launched its private-label credit card (the AE Credit Card). The AE Visa Card comes with the opportunity to enroll in the company’s points-based reward program. AE Credit Card holders receive special promotional offers and advance notice of retail store events.
The AE Visa Card is usable both online and in all of its retail store brands, while the AE Credit card is usable only in American Eagle and aerie stores and within three online sites.
The company recorded $79.7 million in advertising costs during fiscal 2008, up from $74.9 million in 2007. But prepaid advertising expenses, which include direct mail, in-store photographs and other promotional costs, actually dropped between its fiscal years, from $4.5 million in fiscal 2007 to $2.9 million. The company did not indicate which types of pre-paid marketing expenses it had cut back on, nor whether these were supplanted within the overall marketing spending growth.
As previously announced, during 2008, the company’s sales dropped from $3.06 billion in 2007 to $2.99 billion. Net income for 2008 was $179.1 million, compared with $400 million a year earlier. Direct sales increased to $307 million from $243.5 million.
The Opportunist’s Take: Why is PayPal important? Because for some of American Eagle’s brands, the target audiences are under credit-card age, and a segment of those may be protected by the Children’s Online Privacy Protection Act. Don’t know how or whether the American Eagle is age-verifying those customers who are using PayPal to make purchases…but being PayPal-enabled lets young consumers be customers. That said, the company still has to be very, very careful with using the ship-to information it gains from purchases made via this method for marketing purposes. DMers, check with your lawyers first if you market goods or services for children, folks – but also check with your IT people if you’re not yet accepting PayPal as a payment option.
