We shopped at American Eagle's Aerie store and saw why it's achieved explosive success while Victoria's Secret has struggled

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We shopped at American Eagle's Aerie store and saw why it's achieved explosive success while Victoria's Secret has struggled

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Business Insider/Jessica Tyler

Aerie plans to open between 60 and 70 stores in 2019.

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  • American Eagle's Aerie brand has achieved explosive success in recent years.
  • On Tuesday, American Eagle reported a 32% increase in same-store sales at Aerie during the third quarter of 2018. This marked its 16th consecutive quarter of double-digit positive growth.
  • Here's why the brand has been so successful.

Aerie is on fire.

On Tuesday, American Eagle reported a 32% increase in same-store sales for its underwear-turned-lifestyle brand, Aerie. This marked its 16th consecutive quarter of double-digit positive growth. Group CEO Jay Schottenstein described this as one of the company's best results ever in a call with investors after the earnings release.

The company now plans to open between 60 and 70 new Aerie locations next year.

Meanwhile, its main competitor, Victoria's Secret, continues to come under pressure. Critics have said that the retailer's push-up bras and racy runway shows no longer resonate with the modern customer in the era of #MeToo. The brand came under fire last month after an executive from its parent company, L Brands, made controversial comments about transgender and plus-size models during an interview with Vogue.

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Same-store sales were down 6% at Victoria's Secret stores in the most recent quarter. They were down 2% when including online sales.

Read more: These photos reveal why women are abandoning Victoria's Secret for American Eagle's Aerie underwear brand

We visited an Aerie store in Midtown Manhattan and saw why it has been so successful while Victoria's Secret has floundered:

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Aerie has been praised for being a more relatable brand. In 2014, it swapped its airbrushed ads for unretouched photos and launched a body-positive campaign known as #AerieReal.

Aerie has been praised for being a more relatable brand. In 2014, it swapped its airbrushed ads for unretouched photos and launched a body-positive campaign known as #AerieReal.

It is known for its ad campaigns using "real" women ...

It is known for its ad campaigns using "real" women ...
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... and it famously doesn't Photoshop any of the images in its ads.

... and it famously doesn't Photoshop any of the images in its ads.

Images are stamped with captions that read, "No retouching on these girls."

Images are stamped with captions that read, "No retouching on these girls."

Female empowerment has become Aerie's biggest weapon against brands like Victoria's Secret.

“We continue to evolve what real means to our customer," Jennifer Foyle, global president of Aerie, said in a call with investors on Tuesday. "We keep looking forward and ahead with a powerful campaign."

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But Aerie is also growing faster than Victoria's Secret because it has diversified its offering.

But Aerie is also growing faster than Victoria's Secret because it has diversified its offering.

Foyle said on the call that Aerie isn't only an underwear brand — it's a lifestyle brand, too. By not being solely dependent on intimates, the brand can lean into different trends, she said.

This includes apparel, which now makes up a significant portion of its business.

This includes apparel, which now makes up a significant portion of its business.
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The focus is on "cozy" and comfortable clothing, which is one of the leading trends in retail at present.

The focus is on "cozy" and comfortable clothing, which is one of the leading trends in retail at present.

Prices on apparel also skew higher, which helps to boost revenue.

Prices on apparel also skew higher, which helps to boost revenue.
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Victoria's Secret was slow to react to the bralette trend, while Aerie has been at the forefront of this movement.

Victoria's Secret was slow to react to the bralette trend, while Aerie has been at the forefront of this movement.

"They are a more value-oriented product, sort of cheap and cheerful, fun fashion," Foyle told Business of Fashion in 2017.

They also sell lightly-lined bras that don't have expensive molded cups.

They also sell lightly-lined bras that don't have expensive molded cups.

Source: Business of Fashion

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Amercian Eagle prides itself on offering a good store experience.

Amercian Eagle prides itself on offering a good store experience.

Stores are brightly lit ...

Stores are brightly lit ...
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... well-organized ...

... well-organized ...

... and easy to navigate.

... and easy to navigate.
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"I think we're [the] number one-looking store in the malls today," Schottenstein said on Tuesday. "We're one of the few retailers that didn't cut back on service."

"I think we're [the] number one-looking store in the malls today," Schottenstein said on Tuesday. "We're one of the few retailers that didn't cut back on service."
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