American Eagle acquires Todd Snyder for 11 million dollars

New york - When you think of American Eagle, you don't exactly think of a contemporary men's wear label with pieces that usually cost a few hundred dollars. That's a thought you'd have when you think of Todd Snyder, who was bought for 11 million dollars in cash and stock by American Eagle in a deal that was announced this morning by WWD. Todd Snyder's appeal to American Eagle went beyond the designer's namesake men's wear label, however.

Snyder has a hidden gem called Tailgate, a clothing business he established with his father back in 1991. The brand is vintage-sports inspired and has a college-town feel to it. Currently, Tailgate's only store is in Iowa City near the Iowa State college campus. This little niche store really caught American Eagle's attention.

American Eagle's plans for Tailgate including opening two or three stores by the end of 2016, and eventually expanding that number to 200 stores. Currently, American Eagle operates 1000 stores between the U.S. and overseas.

The acquisition by American Eagle includes both Tailgate Co. and Todd Snyder. Snyder, the creative director and founder, will also be stepping into a new role as executive vice president at American Eagle reporting to Global Brand President Chad Kessler. Jimmy Olsson, the ceo and president of Todd Snyder, will join American Eagle as vice president and will continue to lead the day-to-day operations of Tailgate and Todd Snyder New York.

Todd Snyder and Tailgate acquired by American Eagle for 11 million dollars

“Joining a leading American retailer is an exciting step for our brands and provides a strong foundation for future growth,” said Snyder in a statement. “Our new Tailgate store concept is an ideal outlet to integrate AE jeans and apparel, creating a unique lifestyle destination on college campuses. I look forward to contributing to AEO’s future success.”

Snyder's business and career is more promising than ever. In 2012, he was named GQ's best new men's wear designer, and he has also received CFDA's top men's award in 2012, 2013, and 2014. Prior to launching his own label, Snyder had an extensive list of stints on his resume.

Snyder was once a designer for Polo Ralph Lauren, and then became director of men's wear for The Gap, and later moved on to being the senior vice president of men's for J. Crew.

Although Snyder will be joining American Eagle, the Todd Snyder label will continue to be operated independently. Snyder will be lending his voice to American Eagle's men's wear and marketing as well.

In a statement, Interim American Eagle CEO Jay Schottenstein said of the Todd Snyder acquisition that “We are thrilled to add these unique brands to our portfolio, which provide exciting new business opportunities." Schottenstein went on to say that “Todd and Jimmy bring exceptional creative talent and operational skills. They will continue to lead the business, as our organization remains focused on driving continued momentum and profit improvement. Capital investments in the Tailgate and Todd Snyder brands will be paced, with a test and scale approach based on profitability and return on investment.”

Tailgate does it's fair share of business for a small store. The brand has over 150 licenses with different colleges and universities throughout the country ranging from University of Florida to Yale. While college students usually aren't the most avid clothing shoppers, Tailgate provides a market for collegiate apparel outside of the standard college bookstore items like hoodies and sweatshirts.

As American Eagle works on continuing business in an increasingly competitive retail environment, the Todd Snyder and Tailgate acquisition looks like it will prove to be a profitable business move. With a business plan for growth in hand, American Eagle may have just landed themselves a cash cow with Tailgate.

Third quarter results for American Eagle will be announced on December 2, 2015.

photo1:postgazette.com
photo2:shopify.com