Teen retailer pulls the plug on U.K. business

Less than three years after opening stores across the pond, American Eagle Outfitters is closing up shop in the United Kingdom.



The specialty retailer operates three stores in the U.K. It has already closed one location, and is winding down operations at its remaining two stores, as well as its British e-commerce site, according to the Telegraph.



The company opened its first store in 2014. Even though the chain struggled to get a foothold in the competitive U.K. marketplace, American Eagle had an expansion plan. The retailer was aiming to operate between 20 and 30 U.K.-based stores, as well as introduce its Aerie underwear brand, the report said.



American Eagle’s change of plans could be blamed on a number of factors. There is speculation that the company couldn't sustain operations in the increasingly competitive and costly retail environment. Meanwhile, rising inflation has impacted consumer spending. Other domestic retailers operating abroad have also been hit by rising labor costs due to the national living wage and higher business rates in London, according to City A.M.



The retailer is also facing a tough retail environment on national soil. American Eagle’s net income for the first quarter, ended April 29, totaled $25.2 million, or 14 cents per share, compared to $40.4 million, or 22 cents per share, in the year-ago period.



American Eagle reported charges of $5.4 million related to severance and related charges due to corporate restructuring and its previously announced initiative to explore the closure or conversion of company owned and operated stores in Hong Kong, China, and the United Kingdom to licensed partnerships.



Looking ahead to the remainder of fiscal 2017, American Eagle plans to open 35 American Eagle Outfitters and Aerie stores throughout the U.S., Canada and Mexico. It also plans to close between 25 and 40 store locations.