Lifestyle and apparel company American Eagle Outfitters announced Wednesday that it has completed the acquisition of Massachusetts-based Quiet Logistics and other strategic investments in a $360 million move that will help it offer same-day and next-day shipping to customers from American Eagle stores.
Serving over 50 direct-to-consumer and omnichannel brands, including Outdoor Voices and Mack Weldon, Quiet Logistics operates in-market fulfillment centers across the country, with locations including Boston, Chicago, Los Angeles, St. Louis and Jacksonville, Florida. After the acquisition, Quiet Logistics will become a wholly owned subsidiary of American Eagle but will continue to run its business independently.
“AEO’s unique ability to reduce delivery costs amid rising inflation is a direct reflection of the efficiencies provided by their innovative fulfillment model,” said Jay Schottenstein, American Eagle’s CEO and executive chairman of the board. “Quiet Logistics has a highly experienced supply chain leadership team and I look forward to their partnership as we continue to drive operational excellence and grow the platform into a meaningful business.”
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The Quiet Logistics acquisition comes at a time when American Eagle (NYSE: AEO) is expanding its omnichannel presence –– the company’s digital revenues in the third quarter of FY2021 were up 10% year-over-year and rose 42% over the same period in 2019. That’s due in part to American Eagle’s expansion of its same-day delivery service, its customer self-checkout and its virtual selling tool AE Live.
But the company’s omnichannel sales have received the biggest boost from its Aerie brand, which was founded in 2006 but has recently been driving strong digital growth. In Q3 2021, its sales totaled $315 million, an increase of 28% over the same period last year and 70% over Q3 2019. It was the 28th consecutive quarter of double-digit growth for the American Eagle subsidiary.
The acquisition of Quiet Logistics will help American Eagle build on its other recent acquisition, AirTerra, a logistics startup founded by a former Nordstrom executive. The move was seen as highly unusual at the time, as the company’s only previous acquisitions were of two clothing companies, but American Eagle says overhauling its supply chain is part of its long-term vision.
“An important pillar of our strategy is transforming our supply chain to create greater agility, speed and diversification. Our vision is to create an on-demand, hyper-scaled operations platform that enables brand success,” said Schottenstein.
On the company’s Q1 2021 earnings call in May, American Eagle COO Michael Rempell said that the retailer had just begun “scratching the surface” of its supply chain capabilities and cited high growth on the digital side of the business.
“Our revenue rose 57 percent from 2019, producing incremental revenue of $150 million in the first quarter,” Rempell said. “Online traffic and transactions increased well into the double digits. We achieved strong AURs [average unit retail] and significantly higher margin. Further fueling an already highly profitable channel, digital penetration increased to 40% of total revenue, up from 30% in 2019.”
Rempell also said on the call that the company is looking at merchandise returns as another opportunity to leverage its blossoming supply chain and create another source of revenue.
And Quiet Logistics Executive Chairman Eugene “Gene” Gorab is just as bullish as American Eagle when it comes to bringing its supply chain to its full potential.
“We’re excited to join forces with AEO, a fellow industry innovator, to accelerate the adoption of leading-edge fulfillment solutions. Through a shared distribution network, our customers gain significant operational advantages, enabling them to focus more intently on increasing the value of their brands and products,” he said.