Retail

American Eagle to launch beauty business before the holiday season

Key Points
  • American Eagle did not say whether or not the business will be internally developed or if it's considering acquiring another brand.
  • It also announced in July that it will start selling CBD-infused lotions, muscle balms and aromatherapy products.
  • The U.S. prestige beauty industry reached $18.8 billion in 2018, a 6% increased over 2017, according to data from NPD Group.
David Paul Morris | Bloomberg | Getty Images

American Eagle said Wednesday that it plans to launch a beauty business before the holiday season.

"We have a special name for it, a special kickoff and we're going to surprise everybody so we're not going to tell you now and it will be very exciting," said CEO Jay Schottenstein on an call with analysts. "We've done some customer research it's been very positive. We think this is a big opportunity for us to get into the beauty business."

The company did not say whether or not the business will be internally developed or if it's considering acquiring another brand.

The U.S. prestige beauty industry reached $18.8 billion in 2018, a 6% increase over 2017, according to data from NPD Group.

Currently, American Eagle offers a few products such as concealers, eye shadow palettes and makeup bags from other brands that are mostly sold online.

It also announced in July that it will start selling CBD-infused lotions, muscle balms and aromatherapy products to be supplied by Green Growth Brands. Sales are expected to begin in October.

However, Ulta Beauty's earnings report last week, it warned that industry-wide, cosmetics has been struggling and said that will continue in the near term. Its CEO Mary Dillon said the most recent cycle of innovation has not driven consumers to purchase products for new beauty rituals, "resulting in a soft cycle for the cosmetics category in the U.S."

American Eagle's stock is down more than 14% Wednesday, at one point hitting a 52-week low, after reporting same-store sales growth for the second quarter that missed analyst expectations. American Eagle shares are down 26% since January, bringing the company to a market value of $2.4 billion.

American Eagle did not immediately respond to requests for comment.