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American Eagle Steps into Mexico

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In keeping with its strategic plan to strengthen its North American presence, leading teen retailer, American Eagle Outfitters Inc. (AEO - Free Report) , came up with the proposal to open its first company-owned and operated store in Mexico City.

The store, proposed to be opened in the Perisur’s shopping center, a mall based in the southern region of Mexico City, will open to public on Feb 20, this year. This store opening is in line with the company’s decision to introduce a string of vertically owned and operated stores in Mexico. As part of this announcement, the company is slated to open 6 company-owned stores in Mexico in 2013, with plans to further expand its store base in the state over the next several years.

Moreover, the company stated that each of the stores opened under the plan will either house a separate Aerie section within the store, via a shop-in-shop format, or will have an Aerie store adjacent to the AEO store.

We appreciate American Eagle’s plan to step into Mexico to seek growth given the ample opportunities in the market. The American Eagle brand, over a short span of time has gained strong recognition in Mexico as evident from the success of its Mexico-specific e-Commerce site that was launched last fall.

Further, the company’s entry into Mexico is expected to play a key role in fulfilling its long-term goal of expanding globally. The company’s recent achievement on the international front was marked by licensing its stores in Japan, Israel and Poland in 2012, as well as continually strengthening its presence in the Middle East.

American Eagle currently markets its products through 50 international franchise stores in 13 countries. The company also ships to 77 countries worldwide through its e-Commerce sites.

One of American Eagle’s peers, Gap Inc. (GPS - Free Report) , also stepped into the Mexican market in Sep 2012, launching its first stand-alone store in Mexico. Earlier, the company offered the Gap brand through the store within a store concept in Liverpool Department stores throughout Mexico.

With stringent focus on making a foray into the world markets, American Eagle currently holds a Zacks Rank #2 (Buy). Other stocks that continue to perform well in the apparel retailing space are DSW Inc. (DSW - Free Report) and Citi Trends Inc. . Both these companies carry a Zacks Rank #1 (Strong Buy).

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