The new concept is the first time that American Eagle will launch a new brand via the Internet. Part of the reason is ease. The Web will facilitate a simultaneous international kickoff and American Eagle already ships products sold on its flagship brand's Web site to 50 countries.
"Our financial exposure is very minimal [with the Web launch]," O'Donnell said. Moreover, the Internet allows the amassing of research and comments from consumers. "You can gain a tremendous amount of valuable knowledge before your brick-and-mortar launch," he said.
Investors reacted positively to American Eagle's announcement. The company's stock was up almost 1.8 percent in New York Stock Exchange trading, closing at $19.10.
Though American Eagle is taking its time to build stores for 77kids, this year it will kick off an aggressive campaign to open new units and remodel existing ones for both its namesake brand and aerie by American Eagle, the lingerie brand for 15- to 25-year-old women. O'Donnell said the company plans to open at least 40 shops and renovate 50 existing units for American Eagle. He also said aerie will open 70 new stand-alone stores, compared with 36 last year.
O'Donnell said there are no plans to close Martin + Osa, although he is taking a more cautious approach with the concept, which emphasizes style, fit and better fabrics such as cashmere and Merino wool for the more sophisticated customer. Martin + Osa opened 19 stores in the past 16 months.
O'Donnell said gross margins and sales per square footage are among the benchmarks for being tracked for Martin + Osa. "We'll know in black and white very definitively whether we're moving along in the right vein," he said.