Brief:

• American Eagle Outfitters reported a rebound in sales in Q1, as TikTok campaigns helped drive a surge in online demand. Digital sales rose 33% year over year, including a 75% gain for its Aerie brand, as homebound consumers ordered more leggings and fleece wear, management said in a conference call with analysts.
• The retailer enlisted influencers like Charli D'Amelio, the 16-year-old girl from Connecticut with 61 million followers on TikTok, on an #AerieRealPositivity effort that generated almost 2 billion impressions. So far in Q2, the company has seen a 100% jump in sales for Aerie and 50% gain for American Eagle.
• The more than 500 stores that have reopened amid the lifting of pandemic lockdowns are reaching 95% of last year's productivity, a sign that "we are getting more than our fair share of pent-up demand," American Eagle COO Michael Rempell said during the call.

Insight:

American Eagle's early results from the quarter indicate that the company is starting to recover from a dismal period of store closures for retailers brought on by the coronavirus pandemic. By creating campaigns for TikTok, the social video app that's immensely popular with U.S. teens, the retailer connected with a young target audience that was ready to spend money online or at reopened stores.

While American Eagle has previously deployed TikTok campaigns, Aerie is a relative newcomer, having created its account in mid-April as it sought ways to reach locked-down consumers with a positive message, Glossy reported. The brand hadn't run any advertising campaigns on the app before the pandemic, but did have brand ambassadors active on the service, including Charli D'Amelio, whom The New York Times dubbed "the reigning queen of TikTok," along with Iskra Lawrence and Denise Mercedes.

Generating almost 2 billion views for its #AerieRealPositivity push indicates that the intimates and swimwear label has, in just a few months' time, established a strong foothold on TikTok. American Eagle's uptick in sales, particularly on digital channels, signals that such social efforts are driving the type of results that could bolster a needed recovery.

American Eagle lost $257 million as revenue plunged 38% to $552 million in Q1 from the prior year, its quarterly report said. As it reopens stores, the company has an opportunity to transform digital campaigns like those on TikTok into online sales and foot traffic at brick-and-mortar locations.

American Eagle appears to be investing in TikTok more broadly, and was among the first brands to launch a campaign on the app with a hashtag challenge, brand takeover and test of an in-feed video ad unit that includes a badge. The challenge component urged people to post videos of themselves wearing the brand's clothing to a featured soundtrack. The activation last fall was part of American Eagle's collaboration with hip-hop star Lil Wayne, who appeared in a broader campaign for the AE x Young Money 2019 collection.