so, you want to change the world?

Transcription

SO, YOU WANT TO
CHANGE THE WORLD?
GOO D. S O DO W E .
C H E C K O U T H OW W E ’ R E M A K I N G O U R WO R L D
A B E T T E R P L AC E . W E H O P E YO U ’ L L J O I N U S .
D I S COV E R , L E A R N A N D S U P P O R T N E W WAYS TO
L I V E YO U R L I F E I N A B E T T E R WO R L D.
TABLE OF CONTENTS
AE Better World
About Us
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About This Report . . . . . . . .
Our Stakeholders . . . . . . . . .
Corporate Governance. . . . .
Guiding Principles. . . . . . .
Protect, Respect, Remedy. .
Codes & Governance. . . . .
Our Products. . . . . . . . . . . .
Public Policy . . . . . . . . . . . .
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Supply Chain
Our Strategy. . . . . . . . . . . . . . . . . . . . . .
Working With Factories. . . . . . . . . . . . .
Our Factory Inspection Program . . . . .
Factory Training & Capacity Building. .
How Our Products Are Made. . . . . . . . .
Making Smarter Business Decisions . . .
Leveraging Collective Efforts. . . . . . . . . .
Our Performance. . . . . . . . . . . . . . . . . .
Supply Chain Security. . . . . . . . . . . . . . .
Supply Chain Goals . . . . . . . . . . . . . . . .
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Environment
Conserving Resources. .
Minimizing Waste . . . .
Product Innovation. . . .
Environment Goals. . . .
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Associates
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Our Values. . . . . . . . . . . . . . . .
Compensation & Benefits . . . . .
Communication & Retention . .
Diversity. . . . . . . . . . . . . . . . . .
Diversity Statistics. . . . . . . . .
Hiring & Training . . . . . . . . . .
2010 Business Challenges . . . . .
Associate Goals. . . . . . . . . . . .
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Community
National Charity Partnerships. .
Customer Engagement . . . . . . .
Major Community Initiatives . .
International Initiatives. . . . . . .
Associate Activities. . . . . . . . . .
Community Goals . . . . . . . . . .
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FAQs
Contact Us
GRI Index
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AE BE T TER WORLD
ABOUT US
About Us
American Eagle Outfitters, Inc. is built
on more than 30 years of customer focus,
dedication, and innovation. The company was
founded with one store, in Novi, Michigan,
in 1977. Today, you see many iterations of
the number 77 throughout our clothing,
vernacular and imagery - one of the many
threads of respect to our rich heritage.
The Schottenstein family of Columbus, Ohio took over the company in the early
nineties, which is also when we introduced our first line of private-label merchandise.
The Schottensteins were, and remain today, consummate retailers, with generations of
experience and several successful companies. Under this leadership, we set our sights
on creating a brand that offers high-quality, on-trend clothing at affordable prices,
targeted to the college lifestyle. Decades later, that core mission remains.
In 1994, American Eagle Outfitters, Inc. went public on NASDAQ under the “AEOS”
symbol. Over the next decade, the company demonstrated outstanding growth and
profitability, solidifying its position as a leading lifestyle brand. In March of 2007, the
company began trading on the New York Stock Exchange under the symbol “AEO”.
Our shareholders include associates, individuals, large financial institutions, socially
responsible investment funds, and everyone in between.
American Eagle Outfitters, Inc. is now a portfolio of brands, with
American Eagle Outfitters for 15 - 25-year-old girls and guys, Aerie
for the college girl, 77kids for grade-schoolers, and little77 for infants.
AE.COM®, the online home of all of our brands, ships to 76 countries
worldwide.
Over the past few years, we have expanded into the international market.
We launched stores in Canada in 2001 and opened 3 franchise stores
in the Middle East in 2010. Our first franchise stores in Hong Kong,
China, and Russia opened in early 2011, and the company has plans for
expansion into Japan and Israel in the near future.
With corporate offices in three very distinct locations - Pittsburgh, New
York City, and Hong Kong - American Eagle Outfitters, Inc. has built a
distinctive company culture based on our core values that continues to
shape our aspirational yet accessible brand identities. Today, we have more
than 1,000 stores and 30,000 associates worldwide.
For more information on the company, please visit our investor
information site1.
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About This Report
1 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-homeprofile
2
AE BE T TER WORLD
ABOUT US
ABOUT THIS REPORT
About This Report
This website represents American Eagle Outfitters, Inc.’s first comprehensive
Corporate Responsibility report, available exclusively online. It focuses on four key
areas of our company: Supply Chain, Environment, Associates, and Communities.
Where possible, the report references relevant indicators from the Global
Reporting Initiative (GRI) G3 Guidelines2 and GRI Apparel & Footwear Sector
Supplement3. Unless otherwise specified, all data reflects our Fiscal Year 2010
reporting period.
This report was several years in the making. First, we had to define what corporate
responsibility means to us. We are striving to build a successful, profitable business
that has an enduring positive impact on our people and the communities in
which we live, work, and play. Long before putting words to paper, we took time
to understand the array of human rights, social, and environmental issues that we
face and took steps to strengthen the foundation of our program. We have had the
privilege of learning from peers in our industry and leading companies in other
industries that blazed early trails on human rights and corporate responsibility
issues. By observing their successes and missteps, we are now working to
implement program elements that are most relevant to our business and most
likely to have a positive impact. We have also discovered the value of opening our
doors and listening to the voices of our diverse stakeholders - all of whom continue
to inspire us, challenge us, and encourage our efforts.
developing this report, we also sought out specific thoughts and suggestions from
key stakeholders, in particular, Dr. Ruth Rosenbaum of the Center for Reflection,
Education, and Action (CREA)7.
We still have work to do. As this report demonstrates, our current programs are
neither perfect nor complete - but we are making progress and we are committed
to continuing to improve.
Many advocates of corporate transparency cite U.S. Supreme Court Justice Louis
Brandeis’s famous observation that “sunlight is the best disinfectant.” We agree.
We believe that reporting publicly on corporate responsibility is one of the most
effective ways to help us remain focused, disciplined, and accountable in our
efforts. We plan to issue a comprehensive report every two years, with more
frequent updates on important issues and quantitative performance indicators as
needed.
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Our Stakeholders
The topics covered in this report reflect the core issues raised through this
learning process and by our stakeholders. We define the “materiality” and
relative importance of these issues through our Commitment to Respect Human
Rights4, Code of Ethics5, and Vendor Code of Conduct6, as well as our systematic
participation in multi-stakeholder initiatives and ongoing engagement with
key stakeholders at global, regional, national, and local levels. In the process of
2 http://www.globalreporting.org/reportingframework/g3guidelines/
3 http://www.globalreporting.org/ReportingFramework/SectorSupplements/ApparelFootwear/
4 Page 7
5 http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjIwODh8Q2hpbGRJRD0tMXxUeXBlPTM=
&t=1
6 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-VendorConduct
7 http://www.crea-inc.org/
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AE BE T TER WORLD
ABOUT US
OUR STAKEHOLDERS
Our Stakeholders
Customers
The American Eagle Outfitters customer is between 15 and 25 years old and part of
the most socially conscious generation in modern history. These women and men
are at the center of everything we do. They are our reason for being.
Our customer-focused point-of-view drives our business decision-making. We
were among the first specialty retailers to enable customer reviews on our product
website, whether positive or negative. We invest in technology such as mobile
applications and social media tools that define our customers’ way of life. We strive
to anticipate our customers’ desires and listen to their needs, which they often
express in reviews and honest feedback on ae.com. Consequently, when customers
told us that they wanted us to help make the world better, we listened. From the
streets of New York City to the streets of Kuwait City; from the classrooms of
Louisville to the classrooms of Hong Kong; from the beaches of L.A. to the beaches
of Dubai - we work hard to be a brand that our customers are proud to wear
because we are fun, laid-back, fashionable, adventurous, and striving to live our
lives in a Better World.
Associates
The vitality of our brand resides in our people. We strive to be an employer of
choice - a place where people are excited to come to work because they believe in
what we do, enjoy working with each other, and have fun doing it.
Our employees, known as associates, reflect our diverse customer base with
differing backgrounds, unique talents and eclectic tastes. More than 30,000 people
worldwide work for American Eagle Outfitters, Inc. In addition to the thousands of
people in our stores, we employ engineers, software developers, attorneys, fork lift
operators, marketers, PhDs, store construction specialists, accountants, merchants,
designers, warehouse supervisors, and many other skilled professionals in our
corporate offices and distribution centers. More than half of our associates are
younger than 25, enabling us to stay more closely connected to the demographic
we serve. Not surprisingly, some of the best ideas about how we can make our
world a better place have come from our associates - from how to reduce our
environmental footprint to ways to improve the health and safety conditions in an
apparel factory to how best to serve the communities where we live work, and play.
For more information on what it’s like to work at American Eagle Outfitters, Inc.
please see Live Your Life Love Your Job8.
Shareholders
As a publicly traded company on the New York Stock Exchange (NYSE: AEO),
American Eagle Outfitters, Inc. strives to deliver strong returns over the long-term
to its investors. Our shareholders include associates, individuals, large financial
institutions, socially responsible investment funds, and everyone in between.
Our goal is to provide those who have an ownership stake in our company with
timely, transparent communications about business performance, as well as insight
into how we plan to grow. We maintain a healthy balance sheet and strong cash
position, while returning value to shareholders through a combination of share
buybacks and dividends. In early 2011, we announced that AEO, Inc. would no
longer publicly report monthly sales to facilitate a longer-term perspective on
business growth. Retailers face many challenges, including variable consumer
confidence, rising cotton prices, or adverse weather conditions. That said, our
longstanding approach continues to be rooted in operational efficiency and
financial discipline designed to withstand any external event or economic
environment.
Supply Chain Partners & Stakeholders
We partner with apparel manufacturers in more than 20 countries around the
world, including the United States, to produce our products. Although we do not
own or operate any of these factories, we firmly believe that the people who make
our clothes should be treated with dignity and respect. We strive to build business
relationships with apparel suppliers who share our commitment to worker safety
8 http://www.liveyourlifeloveyourjob.com/
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AE BE T TER WORLD
ABOUT US
OUR STAKEHOLDERS
Our StakeHolders (continued)
and well-being and will work to meet or exceed national and international labor
law standards.
We also work with a diverse array of transportation providers in our supply chain,
including ocean and air freight carriers and freight forwarders and consolidators,
who are critical to the timely and efficient movement of our merchandise.
Whether you are a customer, an associate, a shareholder, a supply chain partner, or
another concerned stakeholder, we welcome your constructive ideas, thoughts, and
opinions on how we’re doing. Send us an email at: [email protected].
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Corporate Governance
Many of the social and environmental issues that we face in our global supply
chain are too complex, too widespread, and too deeply embedded for any one
company to resolve working alone. To that end, we also seek to build partnerships
with other stakeholders who share our desire to build a Better World. Some of
our key partners include the International Labor Organization (ILO)’s Better
Work Program9, the Fair Labor Association (FLA)10, local and global civil society
organizations, non-governmental organizations (NGOs), trade unions, other
brands and retailers, and government officials. Through their own vast networks
of people and expertise, these partners help to keep us informed about issues and
concerns in countries where our clothes are being made. Their diverse perspectives
enrich our thinking, challenge us to examine social and environmental issues in
a new light, and provide opportunities to pool our resources to tackle complex
problems in a more sustainable way.
“We find social inspections beneficial because they help us build our
reputation as a socially responsible business. Our customers tend to
favor suppliers who demonstrate socially responsible policies. We’ve
also discovered that good social and environmental practices help us
reduce unnecessary resource consumption, waste and emissions and save money. Reducing our utility bills and waste disposal costs
brings us immediate cash benefits. There are other benefits, too.
A good reputation makes it easier to recruit and keep employees.
Employees are also better motivated and more productive. Investors
recognize this and are more willing to finance our factory.”
- A CHINESE SUPPLIER
9 http://www.betterwork.org/EN/Pages/newhome.aspx
10 http://www.fairlabor.org/fla/
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AE BE T TER WORLD
ABOUT US
CORPOR ATE GOVERNANCE
American Eagle Outfitters, Inc. is built on integrity, honesty, and trust. These
virtues are our most important assets. Living them is the responsibility of everyone
at our company.
More information on our Corporate Governance practices is available here19. We
invite anyone who may have governance questions or comments to email the Board
at: [email protected].
Our Commitment to Respect Human Rights11, Code of Ethics12, and Vendor Code
of Conduct13 establish our guiding principles, which apply to every associate,
officer, director and supplier of the company.
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Guiding Principles
Good governance begins with our Board of Directors, which provides the
independence and diversity of perspective necessary to ensure strong leadership
and effective oversight of the company. Effective June 2011, the Board of Directors
of American Eagle Outfitters, Inc. had nine members, seven of whom were
independent, including one lead independent director. The Board’s general policy
is that the positions of Chairperson of the Board and Chief Executive Officer
should be held by separate persons. Our Corporate Governance Guidelines14
provide a framework for our governing principles.
The Board maintains three operating committees: the Audit Committee15,
Compensation Committee16 and Nominating and Corporate Governance
Committee17. Each Committee is composed entirely of independent directors.
The Nominating and Corporate Governance Committee18 is responsible for the
oversight of policies and practices related to Corporate Responsibility.
Maintaining high ethical standards and sound corporate governance is a primary
focus of everyone at American Eagle Outfitters, Inc. It’s good for our business, the
marketplace in which we compete, and for those who place their trust in us.
11 Page 7
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14 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-govguidelines
15 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-govcommcomp#audit
16 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-govcommcomp#compensation
17 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-govcommcomp#nominating
18 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-govcommcomp#nominating
19 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-govoverview
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AE BE T TER WORLD
ABOUT US
GUIDING PRINCIPLES
Corporate Governance (continued)
Guiding Principles
Our Code of Ethics20, and Vendor Code of Conduct 21 establish our guiding
principles, which apply to every associate, officer, director, and supplier of
American Eagle Outfitters, Inc.
Our Commitment to Respect Human Rights
on the rights of others and to address adverse impacts that occur; and greater
Access to Effective Remedies for victims of human rights abuses.
Our commitment is implemented through our Code of Ethics25, and Vendor Code
of Conduct 26 and applies to all associates, officers, directors, and suppliers of the
company.
We believe that the idea of human rights is as simple as it is powerful - treating
people with dignity. We acknowledge and embrace our role to respect human
rights.
American Eagle Outfitters, Inc. supports the universal human rights principles as
outlined in the Universal Declaration of Human Rights (UDHR)22 and the eight
core conventions of the International Labor Organization (ILO)’s Declaration on
the Fundamental Principles and Rights at Work 23.
We work to promote respect for human rights throughout our operations. We
seek to avoid practices that infringe upon human rights and will work to address
violations we find, including within our supply chain. We recognize that, in
practice, this may involve complex and difficult decisions in order to balance
competing rights, as well as practical constraints within the business and legal
environments in which we operate.
Our human rights commitment is inspired and informed by the United Nations
‘Protect, Respect & Remedy’ Framework 24 as outlined by the Special Representative
of the UN Secretary-General on human rights and transnational corporations.
This Framework rests on three pillars: the State Duty to Protect human rights
through laws, regulation, and adjudication; the Corporate Responsibility to
Respect human rights, which means to act with due diligence to avoid infringing
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22 http://www.un.org/rights/HRToday/declar.htm
23 http://www.ilo.org/public/english/standards/
24 http://www.business-humanrights.org/media/documents/ruggie/ruggie-guiding-principles-21-mar-2011.pdf
&t=1
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AE BE T TER WORLD
ABOUT US
PROTECT, RESPECT, & REMEDY
Protect, Respect, Remedy
United Nations (UN) ‘Protect, Respect, Remedy’ Framework
At American Eagle Outfitters, Inc.
HUMAN RIGHTS PRINCIPLES
AND POLICY COMMITMENT
SCOPE
ASSESSMENT OF BUSINESS
IMPACT AND ONGOING DUE
DILIGENCE
• Commitment to Respect HUman Rights
• Code of Ethics
• Vendor Code of Conduct
INTEGRATION AND TRACKING
PERFORMANCE
• Factory pre-approval process based on Vendor Code of
Conduct compliance
• Factory termination process based on severe or repeated
Vendor Code of Conduct non-compliance
• Supplier & inspection data maintained in Enterprise
database and Corporate Responsibility database
• Defined performance metrics for suppliers
• Formal and informal reporting on performance between and
across functions
COMMUNICATION AND
REPORTING
• Corporate Responsibility Report / AE Better World public
website
• AEO, Inc. investment and corporate governance public
websites
• CEO-led company-wide meetings
• FLA publication of supplier IEM results
• FLA Annual Report
• SEC and other legal filings
• Company intranet and quarterly newsletter for associates
• Regular engagement through social media (Facebook,
Twitter)
• Participation in national and international conferences and
public presentations
• Formal and informal engagement with external stakeholders
• Applies to all Associates, Officers, Directors, and Suppliers
of the company
• Board of Directors oversight of corporate responsibility and
human resources issues
• Dedicated Human Resources team (Associates, Officers)
• Dedicated Corporate Responsibility team (Suppliers)
• Separate AEO Foundation Board of Directors oversight of
community investment policies and Foundation funds
• Open Door Policy
• Dedicated confidential AEO Hotline and grievance reporting
website
• Supplier inspection and training programs
• Systematic and ongoing engagement with external
stakeholders
ACCESS TO REMEDIES/
GRIEVANCE MECHANISMS
• Dedicated confidential AEO Hotline and grievance reporting
website
• FLA complaints mechanism
• Pilot program with third-party provider in China to
implement local worker grievance hotline
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AE BE T TER WORLD
ABOUT US
CODES & GOVERNANCE
Codes & Governance
CORPORATE RESPONSIBILITY GOVERNANCE
Code of Ethics
The AEO, Inc. Code of Ethics outlines Company standards for acting in a legally
and ethically appropriate manner. This Code applies to all associates, officers,
suppliers and the Board of Directors of American Eagle Outfitters, Inc. and its
subsidiaries. The Code sets forth written standards designed to deter wrongdoing
and to promote honest and ethical conduct, legal and regulatory compliance, and
full, fair, accurate, timely, and understandable Company public disclosure.
All associates and directors of the company are required to report any known
or suspected violations of the Code of Ethics. Violations may be reported
anonymously through the AEO Hotline (1-888-587-3582) or online at www.
aehotline.com.
In addition, company policy forbids any company official to take any action in
retaliation against an associate for reporting or threatening to report a violation
of the Code of Ethics in good faith or for cooperating in any investigation of a
violation of the Code. Any such retaliation is itself a violation of the Code.
Vendor Code of Conduct
The AEO, Inc. Vendor Code of Conduct is based on universally-accepted human
rights and labor rights principles and sets forth our minimum expectations for
suppliers. The Code must be posted in every factory that manufactures our clothes
in the local language of the workers. All suppliers must contractually agree to abide
by the terms of our Vendor Code of Conduct before we will place production with
them.
BOARD OF DIRECTORS
CEO
EVP
CHIEF OPERATING OFFICER
NEW YORK DESIGN CENTER
VP
AEO PRODUCTION
VP CORPORATE RESPONSIBILITY
CUSTOMS COMPLIANCE OFFICER
(AE, AERIE, AND 77KIDS)
SR. DIRECTOR
CORPORATE RESPONSIBILITY,
TRADE & PRODUCT SAFETY
COMPLIANCE
VP
AERIE PRODUCTION
SR. MANAGER
MERCHANDISE COMPLIANCE
The American Eagle Outfitters, Inc. Board of Directors’ Nominating and
Corporate Governance Committee has ultimate oversight of policies and practices
related to Corporate Responsibility.
We also have a dedicated team based in the United States and Asia that is
responsible for implementing and enforcing our Corporate Responsibility policies
on a day-to-day basis. This team reports annually to the Board of Directors,
independently of Production and Sourcing.
Guy Bradford, Vice President of Corporate Responsibility and Customs
Compliance Officer, leads our corporate responsibility and compliance divisions.
He reports to Michael Rempell, Executive Vice President and Chief Operating
Officer of the New York Design Center, who also oversees Production and Sourcing
for the American Eagle Outfitters® and Aerie® brands.
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AE BE T TER WORLD
ABOUT US
CODES & GOVERNANCE
This organizational alignment is new as of July 2009. In the early days of our
social and environmental compliance program, the Vice President of Corporate
Responsibility and Customs Compliance Officer reported to the Chief Supply
Chain Officer, who oversees logistics and is wholly independent of Production
and Sourcing. We believed this independence was critical to establish a clear and
autonomous social and environmental compliance function within our supply chain.
However, over time these policies and procedures became embedded within our dayto-day operations. Today, for example, each new garment supplier must be inspected
and approved by the Corporate Responsibility team before it can be “switched on” in
our information technology system and receive production orders.
In July 2009, we therefore evolved this reporting structure into its current form
to strengthen alignment between the Corporate Responsibility teams and the
Production and Sourcing teams. The teams are now “seated around the same
table.” This builds stronger internal partnerships, which in turn leads to more
informed sourcing strategies and streamlined purchasing practices. Although the
Corporate Responsibility team still maintains a high degree of independence and
autonomy (including its independent reporting channel to the Board of Directors),
we believe this practical, day-to-day integration is a best practice to ensure greater
alignment between Production and Corporate Responsibility goals.
Another strength of our organization is that the Vice President of Corporate
Responsibility and Customs Compliance Officer oversees other compliance
functions, including trade policy and compliance, regulatory compliance, product
safety, and merchandise payables. This breadth of authority provides deep insight
into import and export processes and controls (such as transparency requirements
for apparel and apparel components mandated by Free Trade Agreements and
other trade preference programs), as well as final control over merchandise
payables. In rare but serious instances where a supplier has committed an
egregious compliance violation, the Vice President of Corporate Responsibility
has the power to delay or withhold payment on purchase orders until the issue is
resolved satisfactorily. This is a powerful tool of leverage, albeit one of last resort.
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Our Products
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AE BE T TER WORLD
ABOUT US
OUR PRODUCTS
Our Products
American Eagle Outfitters, Inc. is strongly committed to the safety and well being
of our customers.
We require our products to meet U.S. state and federal and Canadian national laws
and regulations. In certain cases, we also voluntarily adopt industry standards
and best practices that may be higher than legally required or where no clear laws
exist. For example, we apply California Proposition 65 consent judgment standards
to our products that are covered by a Proposition 65 consent judgment to which
we are a party, even though not all of the Proposition 65 consent judgments apply
outside of the state of California.
To ensure compliance with our product safety standards, we maintain an extensive
set of testing protocols for each category of products. All of the products we sell
are tested by an independent testing laboratory in accordance with applicable
regulatory requirements.
Product Recalls
In rare cases where a safety issue has been discovered in a product that has reached
our store shelves, we respond with a comprehensive recall process for all of our
brands. We have a system in place to identify the manufacturer(s) and production
date(s) for our branded products. In the event of a product recall, we activate this
system.
We publicly maintain a list of product recalls conducted in conjunction with the
Consumer Product Safety Commission (CPSC) here27 on our e-commerce website.
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Public Policy
27 http://www.ae.com/web/help/product_recalls.jsp?topic=1
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ABOUT US
PUBLIC POLICY
Public Policy
As a responsible corporate citizen, we engage in public policy matters that are
consistent with our values, principles, and business interests.
We do not maintain a Political Action Committee (PAC), but we actively advocate
our position on international trade, labor and employment, intellectual property,
and other matters that affect our company, our associates, our customers and
other stakeholders. We are members of and participate actively in several industry
associations, government advisory boards, and multi-stakeholder organizations.
Where necessary and appropriate, we develop relationships with government
officials, elected representatives, and regulatory and administrative bodies, as well
as multilateral institutions, non-governmental organizations (NGOs), industry and
trade associations, and other stakeholders to engage in public policy dialogue.
In addition, we join with non-governmental organizations (NGOs), trade unions,
and/or other companies in bringing issues of serious concern to the attention
of foreign governments. For example, in 2004, we co-signed a letter with other
brands28 to the President of the Philippines protesting police harassment of labor
activists. In 2005, we co-signed a letter29 expressing concern about the illegal
incarceration of a Mexican trade union leader. We have also engaged in active
dialogue with government and industry officials on the important issues of factory
fire Safety in Bangladesh30 and child labor in the cotton fields of Uzbekistan31.
Our Memberships and Associations
National, Regional, and Local Business Associations
• National Retail Federation (NRF)
http://www.nrf.com
• Retail Industry Leaders Association (RILA)
http://www.rila.org/pages/default.aspx
• United States Association of Importers of Textiles and Apparel (USA-ITA)
http://www.usaita.com
Government Advisory Committees and Boards
• U.S. Department of Agriculture Cotton Board
http://www.cottonboard.org
• U.S. Trade Representative / U.S. Department of Commerce International Trade
Advisory Committee on Textiles & Apparel (ITAC-13)
http://www.trade.gov/itac/committees/ITAC13.TextilesandClothing.asp
Corporate Responsibility Organizations
• ILO/IFC Better Factories Cambodia / Better Work Program
http://www.betterwork.org/EN/Pages/newhome.aspx
• Fair Labor Association (FLA)
http://www.fairlabor.org/fla/
• Multi-Fiber Agreement (MFA) Forum
http://www.mfa-forum.net
• Responsible Cotton Network
• Business for Social Responsibility (BSR)
http://www.bsr.org
28 http://www.ae.com/Images/corpResp/images/about/philippines_company_joint_letter_110706.pdf
29 http://www.ae.com/Images/corpResp/images/about/BrandsBarriosLetter.pdf
30 Page 22
31 Page 22
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Supply Chain
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SUPPLY CHAIN
Supply Chain
Made in Vietnam. Made in India. Made in
Guatemala. Made in China.
From jeans to hoodies, our clothes all have labels that hint at the different journeys
they take in order to reach our store shelves. Our global supply chain is one of the most
important tools we have to deliver the products that our customers love. However, a
global reach brings with it a global responsibility to ensure that the people who make
our clothes are treated with dignity and respect.
Like our clothes, we have come a long way as a company. We conducted our first
factory inspection in 2001. In 2002, we wrote our first Code of Conduct. Today, we
have a Vendor Code of Conduct32, a dedicated team of people, and a comprehensive
factory inspection, remediation, and training program focused on improving working
conditions in the global apparel supply chain.
Few factories, if any, are perfect. The root causes of poor working conditions are varied
and complex, and we cannot hope to solve all of the problems alone. Most of the time,
we are just one of several brands working with any given factory and our leverage to
bring about positive change may be limited. However, we continue to learn from and
partner with other companies and stakeholders who share our goals. While there is no
single, one-size-fits-all answer, we are working to identify and implement solutions that
have a positive impact in the lives of the people who make our clothes.
NEXT
Our Strategy
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SUPPLY CHAIN
OUR STR ATEGY
Our Strategy
TR ANSPARENCY
Our strategy to improve apparel factory working conditions starts
with factory inspections based on our Vendor Code of Conduct33. We
then focus on remediating the issues we find during those inspections,
which often includes additional factory training and capacity building
programs.
PARTNER WITH
STAKEHOLDERS
Unfortunately, we can’t solve all of the problems we find by working
alone, so we partner with other brands and retailers, multi-stakeholder
organizations, civil society groups, trade unions, governments, and others
to better understand and address what is happening in the factories and
countries where our clothes are made. Working together, we strive to
collectively develop more sustainable solutions to the problems we find.
FACILIT Y TR AINING / IMPROVE
POLICIES, PROCEDURES & SYSTEMS
Finally, we are committed to being transparent about how we are doing.
We know that reporting publicly on our efforts is one of the most effective
ways to ensure that we remain focused on our goals, disciplined in our
efforts, and accountable for our performance.
FACTORY INSPECTIONS
NEXT
Working With Factories
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SUPPLY CHAIN
WORKING WITH FACTORIES
We do not own or operate any manufacturing facilities. Our branded products are
produced by third-party contract manufacturers located in more than 20 countries
around the world. In most cases, AEO, Inc.’s production comprises only a small
percentage of a supplier’s total production.
Vendor Code of Conduct
Our Vendor Code of Conduct34 is based on universally-accepted human rights
principles and sets forth our minimum expectations for suppliers. The Code must
be posted in every factory that manufactures our clothes in the local language of
the workers. All suppliers must contractually agree to abide by the terms of our
Vendor Code of Conduct before we place production with them.
In 2010, American Eagle Outfitters, Inc. joined the Fair Labor Association (FLA)35.
As part of that commitment, we are working to bring our Vendor Code of Conduct
into full alignment with the FLA’s Code of Conduct.
Our Team
We have a small team of people based in the United States and Asia who are
dedicated to improving the lives of garment workers. They spend much of their
time visiting factories, conducting inspections, meeting with factory management
and speaking with workers.
Every day, our team members gather invaluable real-time information about the
workplaces around the world where our clothes are made.
“There are many reasons why I love my job, but top of the list is that I
am encouraged to be creative, emboldened to be visionary, and paid
to contribute to a fairer, safer and cleaner world.”
- MAY L ., CORPOR ATE RESPONSIBILIT Y
35 http://www.fairlabor.org/fla
Our Factory Inspection Program
We believe that the workers who make our clothes should be treated with dignity
and respect. To that end, we maintain an extensive factory inspection program to
monitor compliance with our standards. In FY 2010, we conducted 349 inspections
in 329 factories around the world.
“As a compliance auditor, I spend many exhausting hours traveling
to and from factories. But when I see positive change in a factory
manager’s mindset or a better environment for workers, it makes me
proud of my contribution and keeps me passionate about my work.”
- RITA T., CORPOR ATE RESPONSIBILIT Y
Factory inspections are just the first step towards improving working conditions.
Once compliance issues have been identified, we work with our suppliers to
improve policies, processes, and management systems to correct non-compliance
problems and help to ensure that they won’t recur again in the future.
The Root Causes of Poor Factory Working Conditions
Few factories, if any, are perfect. Working conditions vary dramatically from
country to country, region to region, and factory to factory. Many times, despite
our best inspection efforts, factories are still not as good as we would like them to
be. The reasons for this are varied and complex. Some of the factors that contribute
to poor working conditions in global apparel factories include: unreasonable
expectations by brands and retailers regarding cost and speed to market; poor
management systems and/or inefficient and outdated production processes by
factories; strong industry price competition and uneven enforcement of standards;
outdated national labor and environmental laws and poor law enforcement by host
country governments; and complex international trade rules that place high import
tariffs and/or significant paperwork burdens on imported apparel products.
There are no easy fixes. However, by addressing challenges as they arise and
continuing to partner with our suppliers wherever possible, we are striving to bring
about an environment of continuous improvement in our supply chain.
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OUR FACTORY INSPECTION PROGR AM
Working With Factories (continued)
Our Factory Inspection Program
FACTORY APPROVAL PROCESS
New garment factories must pass an initial inspection in order to do business
with us. In FY2010, we evaluated 77 new factories. Of these, 17% were unable or
unwilling to meet the standards required to pass our inspections and were not
approved for AEO, Inc. production.
PRODUCTION TEAM
REQUESTS NEW FACTORY
COMPLIANCE
CONDUCTS INSPECTION
Ongoing Factory Inspections
Once garment factories are approved, we strive to re-inspect them at least once a
year. While we occasionally are unable to get to a factory in a particular year, we
work with third-party auditors and independent locally-based monitors to make
our best effort to meet this goal.
We review the outcome of these inspections with factory management with the
goal of helping them to continuously improve their performance. We recognize
that compliance may not be achieved immediately, but our strong preference is to
keep working with factories to help them improve over time.
“In recent years, we have noticed that AEO has become more
understanding of compliance realities in the factory. They now look
beyond the “pass” and “fail” of compliance and have been more
supportive in giving advice so that the factories can improve in their
CSR efforts.”
FACTORY DOES
NOT MEET STANDARDS
CORRECTIVE ACTION
PLAN ISSUED,
CAP FOLLOW UP OCCURS,
RE-INSPECTION OCCURS
FACTORY MEETS STANDARDS
FACTORY ACTIVATED FOR ORDERS
NOTE:
MUST EVENTUALLY PASS OR WILL
NOT BE APPROVED FOR PRODUCTION
- A KORE AN SUPPLIER
Unfortunately, there are some instances where a factory is unable or unwilling
to meet our standards. In those cases, we will take steps up to and including the
severance of our business relationship. In FY2010, we terminated our business
relationship with 9 factories, approximately 2.7% of our total active supplier base,
for compliance violations. For more information on the types of non-compliance
issues we find during factory inspections, please see Our Performance36.
ANNUAL INSPECTION
CYCLE INITIATED
36 Page 24
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FACTORY TR AINING & CAPACIT Y BUILDING
Factory Training & Capacity Building
When we conduct factory inspections, the last thing we want to see is a factory that
has the same problem year after year. So, we strive to work with factories to identify
ways to help them address some of the root causes of compliance problems.
Supplier Meetings
We regularly hold on-boarding meetings for new vendors and regional trainings
for existing suppliers on our Vendor Code of Conduct37 and the policies outlined in
our corporate vendor manual. Our goal is to help suppliers better understand our
requirements when they enter into a business relationship with us.
“[When we compare] our operations today to 5 years ago, we believe
that communication between the factory management and the
workers has improved. Since communication is the key ingredient in a
smooth operation, [we have experienced] many positive effects from
this improvement, including a lower turnover rate and higher worker
satisfaction. In addition, constant management of health & safety
issues has improved the working environment.”
- A KORE AN SUPPLIER
Chinese Labor Law Training
On January 1, 2008, the Chinese government implemented a new series of labor
laws. Many of our suppliers had trouble understanding how to comply with the
new regulations. In October 2008, our global and local team members partnered
with Business for Social Responsibility (BSR)38 and the China Training Institute
(CTI)39 to conduct a labor contract law implementation seminar in Shenzhen,
China.
Several experts, including the Chief Officer of China’s Human Resource and Social
Insurance Ministry Labor Law Research Center, provided guidance to many of
our key suppliers in the region. The session sparked an interactive discussion that
38 http://www.bsr.org/
39 http://ctichina.org/v2/en
proved successful in clarifying many outstanding questions about the new Chinese
labor laws and helped facilitate a new spirit of synergy and partnership.
Transitioning to the Better Factories Cambodia Program
In July 2009, we brought together our suppliers in Cambodia to launch our
membership in the International Labor Organization (ILO)’s Better Factories
Cambodia (BFC)40 program. Two management representatives from each supplier,
along with key ILO representatives, participated in an interactive discussion that
outlined the benefits of the BFC program.
We outlined our commitment to BFC and had a lively discussion about what
this would mean to suppliers - in particular, that we would be relying on BFC
inspection results instead of our own to help reduce supplier “audit fatigue”.
We also encouraged suppliers to review the suite of advisory and training services
offered by the Better Factories Cambodia team and offered our assistance in
helping them to identify or schedule in-factory training that would have real,
meaningful impact for their workers.
“It is important for brands to set up programs to help factories
continuously improve and to narrow the gap among different brand
requirements and legal requirements. [But] we wish more brands
would reduce the frequency and duplication of their audits when
factories demonstrate that they meet brand requirements.”
- A CHINESE SUPPLIER
Pilot Program on Workers Grievances
Effective grievance mechanisms are one of the most important tools any
organization has to ensure that workers’ voices are heard. Unfortunately, many
garment factories around the world still have only rudimentary channels for
workers to communicate their thoughts and concerns to management. When these
channels are ineffective, workers may need to seek out external mechanisms, such
as a brand or retailer that contracts with the factory.
40 http://www.betterfactories.org/
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FACTORY TR AINING & CAPACIT Y BUILDING
In 2011, we launched a pilot project to provide workers in approximately twelve
approved garment factories in China with access to an independent hotline
managed by two external organizations. The organizations will immediately report
to us serious concerns raised by workers, and all concerns on a monthly basis. We
will also partner with these organizations to provide relevant awareness training in
factories based on the issues raised.
Our goal is to encourage the factories in this pilot program to foster an
environment in which workers feel comfortable raising and discussing labor and
social issues in a constructive manner. We will also work with suppliers to redesign their own internal grievance procedures so that they can ultimately manage
effective internal communication channels independently.
We are still in the early phases of this project. We look forward to updating on our
progress in future reports.
Getting an Accurate Picture of Factory Conditions
One of the most challenging issues we face is obtaining access to accurate factory
records during inspections. Unfortunately, some factories have adapted to Code of
Conduct inspections over the years not by fixing problems but by creating false sets
of documents that show perfect (but fake) overtime and wage records.
We believe that this is one of the worst practices a factory can undertake. Resolving
non-compliances is never easy - but it is impossible to help factories improve when
we can’t get a true picture of what is going on inside the factory. In 2010, we took a
strong stance on this issue. We informed suppliers that failure to show accurate sets
of books would result in a significant penalty - up to and including termination
of our business relationship. To promote disclosure, we assured factories that the
penalty of not showing accurate records would be far worse than any instances of
non-compliance these records might reveal, and that we are committed to working
with them to continuously improve whatever problems are uncovered.
Rita’s Experience with Factory Transparency
The following story from one of our Asia-based team members highlights the
challenges we face in this area.
“When talking about false records, I often say that the problem is easy
to understand but hard to correct. One factory that we have been
working with for two years in China provides a good example of the
challenges we face.”
“From 2009 to January 2011, we visited Factory X in China every four
months. During the first few visits, we always found inconsistencies in
the factory records. We struggled to convince the factory managers
to provide us with accurate payroll information because they didn’t
fully believe that we wanted to work with them to fix the problems and that we wouldn’t punish them for the non-compliances that the
records revealed. We spent a lot of time and effort over many months
trying to gain their trust, explain our approach, and help to change
their mindset. Finally, they agreed, and gave us the true payroll
records.”
“As expected, we found some wage and hour problems, but we are
now working together with factory management on a corrective action
plan. We’ve asked the factory to update us monthly on their progress.
In addition, the factory management decided to establish a committee
with direct oversight for workplace health and safety- because health
and safety was another area where they were having repeated noncompliances. The factory management successfully identified that the
root cause of those problems was that no one had direct responsibility
for health and safety issues in the factory.”
“After two years, we are finally starting to see positive, incremental
improvement on wage, hour, and health and safety issues in Factory
X. There is still more work to be done, but I believe by gaining the trust
of Factory X’s management and working with them to identify the root
causes of issues, we have overcome the hardest part of the problem.”
NEXT
How Our Products Are Made
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HOW OUR PRODUCTS ARE MADE
Developing an efficient process to bring our design concepts to market is one of
the most critical aspects of our business. If we’re late in deciding which graphic
t-shirt or what denim style to put in our stores next season, we may also make it
more difficult for our suppliers to make those products and deliver them to us on
time. The good news is that improving our product pipeline is a win-win for us
and our suppliers. Learn more about how we’re working to make smarter business
decisions41.
NEXT
Making Smarter Business Decisions
41 Page 19
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HOW OUR PRODUCTS ARE MADE
MAKING SMARTER BUSINESS DECISIONS
How Our Products Are Made (continued)
Making Smarter Business Decisions
Nothing is more important to the success of our business than getting the right
product in our stores at the right time. In an industry as competitive as ours and with cotton prices and fuel prices on the rise - we have to be quick, flexible,
innovative, and smart about how we do our job. We have to make better decisions
faster, build stronger relationships with the best suppliers around the world, and
manage the many moving parts of our supply chain more effectively.
Streamlining Internal Decisions
In 2010, we began taking several steps to streamline our design and product
development process. First, we took a hard look at our product development
calendar. To reduce time to market and get fresh designs into stores faster, we
needed to better align our internal timelines and eliminate unnecessary and
redundant meetings. At the same time, we also found that we needed to hold
people more accountable for making decisions at major milestones. Our design,
merchandising, and production teams had to develop consensus more quickly
on the specific products to be included in our store assortment each season. To
that end, we have introduced opportunities for closer collaboration earlier in the
product development cycle and built in executive review earlier in the calendar. We
even asked some design and production teams to move offices and sit together so
that they could work more closely on a day-to-day basis.
Strengthening Supplier Relationships
We’ve been working hard over the past couple of years to build stronger business
relationships with the right suppliers around the world. We’re reducing the number
of new suppliers that we bring into our sourcing base each year while expanding
our business with key vertical suppliers who have direct access to yarns and
fabrics. We’re also working to provide more consistent production orders and
greater assurance to suppliers that we are in this for a longer-term relationship. We
believe these deeper partnerships offer more speed and flexibility to get our clothes
to market and the opportunity to chase trends, while providing our suppliers
with greater visibility into future order volumes and the ability to better manage
production schedules. As these strategic suppliers get to know our products, we
also collaborate more effectively on design and fabric innovation.
In addition, we’ve expanded our use of supplier performance data in our decisionmaking. Every quarter - and often on a more frequent basis - our Corporate
Responsibility team sits down with each of our production divisions to discuss
supplier performance in each apparel product category. When major compliance
concerns arise, the teams work together to develop a joint message requiring
supplier corrective action and improvement. The Corporate Responsibility team
also highlights top supplier social performers who may be good candidates to
consider for business expansion.
No relationship can thrive without good, honest communication. To that end, we
are assessing and introducing new ways to facilitate ongoing conversation and
feedback with our suppliers. In August 2011, we held our second biannual Vendor
Summit to share company goals, business trends, and future expectations and
opportunities and asked our suppliers to provide constructive feedback about ways
in which we can improve our business relationships.
Improving Material Management
In today’s world, it is more important than ever that we have ready access to the
materials we need to produce the products that our customers love. So, we’ve had
to become smarter about how we manage the materials and components that are
the building blocks of our clothes, especially fabric. We’ve begun to implement a
more robust fabric platforming process that allows us to react quickly to changing
customer desires without compromising quality or compliance. We’re working to
consolidate core materials across departments and streamline testing procedures.
This active approach to managing materials reduces our exposure to market
fluctuations, promotes more flexible production schedules and helps us to manage
our inventory more efficiently, while at the same time bringing better quality and
consistency and reducing some of the “middlemen” in the supply chain.
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SUPPLY CHAIN
LE VER AGING COLLECTIVE EFFORTS
Leveraging Collective Efforts
Over the years, we’ve learned that we cannot hope to drive sustainable, positive
change in the world’s garment factories unless we partner with others in our industry,
civil society, and governments to leverage our efforts and address problems together.
To that end, we work with human rights and labor leaders, civil society organizations,
and government officials on issues of mutual concern on an ongoing basis.
ILO Better Factories Cambodia/Better Work Program
In 2009, we signed the International Buyers Principles42 of the International Labor
Organization (ILO) Better Work program. Today, we are an active participant in
the ILO Better Factories Cambodia (BFC) and Better Work programs in Vietnam,
Haiti, and Indonesia. As of the fall of 2010, we had encouraged more factories to
join the Better Work program than all but one other participating company. We
look forward to the continued expansion of Better Work to additional countries.
Fair Labor Association (FLA)
In 2010, AEO, Inc. became a Participating Company in the Fair Labor Association.
The FLA is a nonprofit organization dedicated to ending poor conditions in
factories worldwide. As a member of the FLA, we are subject to Independent
External Monitoring (IEM) by FLA-accredited monitors, a process that provides an
additional level of public verification and accountability to our program. The FLA
discloses the results of IEMs conducted for participating companies on its website.
We look forward to working with the many stakeholders of the FLA to help protect
workers’ rights and continue to improve working conditions worldwide.
“As a Participating Company in the Fair Labor Association, AEO
has demonstrated a commitment to improving working conditions
worldwide. Involving brands in multi-stakeholder efforts such as
the FLA will drive long-lasting change for the industry as a whole,
strengthening social compliance programs and protecting workers
throughout the global supply chain.”
- AURE T VAN HEERDEN, PRESIDENT, FAIR L ABOR ASSOCIATION
42 http://www.betterwork.org/EN/buyers/Pages/BuyersPrinciples.aspx
Multi-Fiber Arrangement (MFA) Forum Americas Working Group
We participate actively in the Multi-Fiber Arrangement (MFA) Forum Americas
Working Group, a group of several brands and retailers as well as trade unions,
including the International Textile Garment and Leather Workers Federation
(ITGLWF)43, and civil society organizations such as the Maquila Solidarity
Network (MSN)44 to address a range of compliance issues in Mexico and Central
America, including workers’ right to freedom of association.
“The Maquila Solidarity Network (MSN) has been engaging with
American Eagle Outfitters (AEO) about worker rights issues since
2006. In a number of cases, AEO has responded to requests from
MSN by joining with other brands in calling on shared suppliers to
respect workers’ associational rights and on governments to put a
stop to violence and repression against workers and labour rights
defenders. AEO has also joined with other companies and labour and
non-governmental organizations, including MSN, in multi-stakeholder
initiatives like the MFA Forum, which promoted responsible
competitiveness strategies in garment producing countries immediately
after the phase out of the Multi-Fibre Arrangement. In Mexico, one
focus of the committee’s work has been on how to address systemic
violations of freedom of association.”
“To build on this good record, AEO must devote sufficient resources to
addressing critical supply chain issues, including issues such poverty
wages, precarious work and the general lack of respect for freedom
of association in global supply chains. We also hope AEO will become
more transparent on the locations of its supplier factories and the
steps it is taking to improve its purchasing practices and to ensure that
its sourcing decisions benefit, rather than victimize, workers and good
suppliers.”
- LY NDA YANZ , COORDINATOR, MAQUIL A SOLIDARIT Y NE T WORK
43 http://www.itglwf.org/
44 http://en.maquilasolidarity.org/
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Leveraging Collective Efforts (continued)
Responsible Cotton Network
In 2008, a group of socially responsible investors and civil society organizations
brought to our attention the practice of forced child labor in the cotton fields of
Uzbekistan. Deeply disturbed by the images we saw and reports we heard, we
adopted a policy in June 200845 banning the use of cotton from Uzbekistan in
all products manufactured for American Eagle Outfitters, Inc. Since that time,
we have been active participants in the multi-stakeholder Responsible Cotton
Network, which is a joint initiative of several brands, investors, non-governmental
organizations, and trade unions. Under this umbrella, we have engaged with
government officials in both the US and Uzbekistan in an effort to convince the
Government of Uzbekistan to put a stop to this unacceptable practice.
Fire Safety in Bangladesh
In December 2010, a tragic factory fire in Dhaka, Bangladesh, resulted in the
deaths of more than two dozen garment workers. Although American Eagle
Outfitters, Inc. had never worked with that particular factory, we recognized
that the tragedy highlighted the ongoing, critical need to ensure adequate worker
protection and fire safety in Bangladesh.
We therefore joined with a large group of other brands and retailers to help
bring together key suppliers, industry association leaders, and representatives
of the Bangladeshi government to urge them to begin taking meaningful action
to help prevent similar tragedies from happening again. Following an initial
meeting in February 2011, we issued a joint statement46 emphasizing the need for
a collaborative process to ensure the sustainability of long term efforts to improve
fire safety within the Bangladesh garment industry.
When a new president assumed leadership of the powerful Bangladesh Garment
Manufacturers Exporters Association (BGMEA) later in 2011, we also joined with
other brands in co-signing a letter47 asking him to lead the local industry in taking
45 http://www.ae.com/Images/corpResp/images/supply_chain/Uzbek_CottonLetter.pdf
46 http://www.ae.com/Images/corpResp/images/supply_chain/Bangladesh_Statement.pdf
47 http://www.ae.com/Images/corpResp/images/supply_chain/Joint_Letter_BGMEA_President.pdf
a proactive, collaborative role to strengthen building, systems, and fire safety
within the Bangladeshi garment industry.
Our collaborative work on this critical issue remains ongoing.
Sandblasting
In early 2011, American Eagle Outfitters decided to join other leading companies
in our industry to eliminate sandblasting from our denim manufacturing process.
Sandblasting is a common technique used to create the “worn” look of jeans.
Sandblasting involves high-pressure spraying of abrasive material on denim fabric.
During the sandblasting process, factory workers must wear highly specialized
equipment to protect themselves from potentially serious health effects that
can result from exposure to silica, a component found in sand. Sandblasting
can be done safely, but proper health and safety precautions must be rigorously
maintained. Unfortunately, despite extensive oversight by many companies including American Eagle Outfitters, Inc. - to ensure that all workers have access to
and use proper equipment, we have been unable to ensure compliance in all cases.
Every pair of jeans is unique. Like good red wine, jeans age well. One of the
reasons our customers love our denim is because it helps them live their life more
comfortably. The good news is that we can use alternative techniques to create the
same comfortable jeans without sandblasting. We believe our customers not only
want to live their lives comfortably, but also in a better world.
Until we believe that proper controls can be put in place to ensure that sandblasting
is done safely, we are no longer developing new denim styles with sandblasting.
“Sumangali” Schemes
“Sumangali” is a Tamil word that means a married woman who lives a fulfilling
life with her husband. Unfortunately, in parts of India, it has become the name
of schemes used to recruit young women into contractual working arrangements
in fabric mills and yarn spinners in exchange for a promised lump sum payment
at the end of their contracts. This lump sum is marketed by factories as potential
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Leveraging Collective Efforts (continued)
dowry - a practice which remains common in parts of India even though it has
been officially prohibited since 1961.
In 2011, several civil society organizations brought to our attention that these
women face poor working conditions that include excessive overtime, low wages,
and restricted freedom of movement.
We care deeply about the welfare of the people in our supply chain. We
immediately initiated an investigation that included on-site assessments of any
factories we contract with in the region who might work with yarn spinners or
fabric mills practicing this scheme. We also began engaging local NGOs, local
governments and industry associations, other brands, and through the Fair Labor
Association (FLA) to better understand ongoing efforts and context in the region.
As of the date of this report, our investigation is ongoing.
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Our Performance
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SUPPLY CHAIN
OUR PERFORMANCE
Our Performance
Measuring and analyzing supplier performance is a critical part of our Corporate
Responsibility program. We firmly believe that “what gets measured gets
managed.” We use this information not only to assess new manufacturers who
seek to become approved suppliers, but also how existing suppliers are performing
over time. Regular review and analysis of this data not only helps our team identify
regions or issues that may need special attention, but also drives our discussions
with Production and Sourcing and decisions about where to place our business.
Some of the key metrics that we use to assess the performance of our suppliers on
labor standards and working conditions can be found in the drop down box below.
“When I visit factories, I look at workers’ faces and smile at them.
Sometimes they smile back, sometimes they hesitate. I also approach
them and shake hands, which puts them a little more at ease. I think
it is these moments of interaction that keep me fresh and committed
to the work I do. I have been doing this work for many years and
yet I still believe we have the power to change people’s lives here at
American Eagle - a power that, when used wisely, just might change
the world for the better.”
- AY KUT K ., CORPOR ATE RESPONSIBILIT Y
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SUPPLY CHAIN
OUR PERFORMANCE
Our Performance
Factory Approval Statistics
This chart shows the percentage of factories, by region, that we inspected in FY2010 as part of our New Factory
Approval Process.
REGION
NEW FACTORIES
APPROVED
NOT APPROVED
PENDING
China & North Asia
39
67%
23%
10%
Americas
7
86%
14%
0%
South Asia
19
69%
5%
26%
Southeast Asia
12
50%
17%
33%
Europe, Middle East & Africa
0
N/A
N/A
N/A
T O TA L
77
66%
17%
17%
The data show a below average rate of non-approved factories in the South Asia region. Our team has initiated
a series of focused inspections in India, Bangladesh, and Pakistan to ensure that we are assessing factory
compliance levels accurately.
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SUPPLY CHAIN
OUR PERFORMANCE
Our Performance (continued)
Ongoing Inspection Coverage
We strive to re-inspect approved garment factories at least once a year. While we occasionally are unable to get
to a factory, our internal inspection team partners with third-party auditors and independent, locally-based
monitors to make our best effort to meet this goal. In FY2010, we inspected 98% of garment factories that were
part of our base for the entire year.
REGION
Americas
China & North Asia
ACTIVE FULL YEAR
PERCENTAGE
ACTIVE PART YEAR
PERCENTAGE
# OF FACTORIES
% VISITED
# OF FACTORIES*
% VISITED
8
87.5
14
TOTAL
FACTORIES
64.3
2
83
100
102
68.6
185
Europe, Middle East & Africa
2
100
3
33.3
5
South Asia
21
100
38
60.5
59
Southeast Asia
31
**93.5
27
70.4
58
145
97.9
184
66.3
329
T O TA L
* This column reflects turnover in our supplier base attributed to business needs.
** This percentage includes two factories participating in ILO Better Work programs that had not yet been assessed by Better Work teams.
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SUPPLY CHAIN
OUR PERFORMANCE
Non-Compliance Findings
The chart below shows non-compliances identified in our approved supplier base during ongoing annual inspections.
No Non-Compliances
Identified
Non-Compliances in
1-24.99% of Factories
REGION
CHINA & NORTH
ASIA
Non-Compliances in
25-50% of Factories
AMERICAS
EUROPE,
MIDDLE EAST &
AFRICA
Non-Compliances in More
than 50% of Factories
SOUTH ASIA
SOUTHEAST ASIA
Worker Age Verification Documentation
Child Labor / Workers Under the Legal Age Employed
Hours of Work
Minimum Wages
Occupational Health & Safety Emergency System
Management
Occupational Health & Safety Fire Safety
Infrastructure
Occupational Health & Safety Workfloor & Other
Employee Areas
Disciplinary Practices
Discriminatory Hiring and Employment Practices
Dormitories
Environmental Health & Safety
Forced Labor, Mandatory Overtime or Restricted
Liberties
Freedom of Association
Insurance & Benefits
Local law, Code & Labor Contract Violations
Unauthorized Subcontracting
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SUPPLY CHAIN
OUR PERFORMANCE
Underage Labor
We identified nine instances of underage labor in FY2010, all of which took place in China. In three cases,
the factories fully implemented our remediation policy, which requires that the child be removed from the
workplace immediately, given access to schooling, paid full wages up to the age of legal employment, and
guaranteed a position at the factory once he/she reaches the legal working age. In the other six cases, the
factories were unwilling to take some or all of these steps, forcing us to terminate our business relationship. We
believe these cases stem from the significant labor shortages that have impacted certain regions in China.
Working Hours
Excessive working hours continue to be a significant challenge in our industry. We have been working to better
identify the root causes of this problem, which range from poor production planning and inefficient practices
at the factory level to overbooking, unrealistic timeframes, or last-minute changes to purchase orders by
merchandising and production teams. For more information on what we are doing to streamline our business
practices, please see Making Smarter Business Decisions.
Freedom of Association
We believe that issues related to freedom of association are more widespread in our supply chain than this chart
suggests. In addition, this chart does not identify regions where freedom of association is unlawful. We are
working to revise our inspection protocols to capture concerns related to freedom of association more accurately.
In addition, we are working through multi-stakeholder organizations to tackle challenges in specific countries.
For more information on what we are doing about protection contract issues in Mexico, please click here48.
Occupational Health & Safety
Adequate infrastructure and management systems to ensure the safety of workers in the event of a fire remain a
challenge in all regions. The number of occupational health & safety related issues we found in FY2010 tells us
that supplier management systems are inadequate across much of our supplier base. We are working through
training and on-site engagement to help ensure that factories have processes in place for pro-actively addressing
these items. For more information on our efforts to address this problem, particularly in Bangladesh, please see
Leveraging Collective Efforts.
Local Law, Code, and Labor Contract Violations
In FY2010, we identified several cases in which factories were unable to produce acceptable labor contracts or
were lacking complete employee records. We believe this is due in part to improper usage of temporary worker
arrangements. This is an important issue which we are currently working to tackle more effectively in our
inspection process and with our multi-stakeholder partners.
48 http://www.ae.com/Images/corpResp/images/supply_chain/protectioncontracts.pdf
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OUR PERFORMANCE
Factory Ratings
One of the most important ways we assess factory performance is through overall ratings that aggregate noncompliances and best practices identified during inspections. These ratings are an important tool to help us
analyze how individual factories perform from year to year, as well as overall performance levels in our supply
chain.
One notable point is that new factories that have not yet been approved for production rate significantly lower
than factories that are approved and have worked with us for a period of time. We believe this demonstrates
that our new factory inspection process not only helps to weed out the worst factories, but also that approved
factories that work with our Corporate Responsibility team over time do show measurable improvement in
working conditions.
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SUPPLY CHAIN
OUR PERFORMANCE
Supplier Regions & Countries
The following table and map illustrate countries and regions where we had at least one active supplier in
FY2010. All data in this report is reported according to these regions.
NEXT
Supply Chain Security
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SUPPLY CHAIN
SUPPLY CHAIN SECURIT Y
Security concerns are an unfortunate reality in today’s global supply chains.
American Eagle Outfitters, Inc. is committed to ensuring the security of the cargo
and people throughout our supply chain. For us, taking steps to ensure that illegal
weapons and contraband do not enter our country through our nation’s ports is an
important part of being a good corporate citizen.
AEO, Inc. is a Tier 3 member of the U.S. Customs-Trade Partnership Against
Terrorism (C-TPAT)49 program - the highest ranking awarded by Customs
and Border Protection (CBP), a division of the US Department of Homeland
Security. We work with our suppliers and third-party logistics and transportation
partners to develop and implement programs designed to enhance security
throughout the supply chain in accordance with C-TPAT guidelines and security
recommendations. At a minimum, AEO, Inc. suppliers agree to comply with
C-TPAT minimum security guidelines. Suppliers must also agree to provide us
with details of their in-house security programs and to give us or our designee
(including U.S. Customs & Border Protection officials) access to records and
facilities to verify the implementation of such programs.
We work with our suppliers on an ongoing basis to modify and enhance security
program standards to align with U.S. Customs & Border Protection and/or World
Trade Organization (WTO) requirements.
NEXT
Supply Chain Goals
49 http://www.cbp.gov/xp/cgov/trade/cargo_security/ctpat/what_ctpat/ctpat_overview.xml
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SUPPLY CHAIN
SUPPLY CHAIN GOALS
Supply Chain Goals
2011-12 Supply Chain Goals
• Develop and implement new information technology database system to enhance
collection, analysis, and reporting of factory performance data.
• Strengthen efforts to address social compliance issues in deeper tiers of the supply
chain including, but not limited to, unauthorized subcontractors, laundries,
embroiderers, fabric mills, informal workers, etc.
• Evolve factory inspection and assessment model to enhance identification of root
causes of compliance issues and develop more systematic training and capacity
building programs to improve factory management systems to sustain compliance
over time.
• Enhance integration of corporate responsibility and social compliance issues
into day-to-day business process such as sourcing strategy and decision making;
enhance awareness of decision making impact by designers and merchants on
factory production schedules.
NEXT
Environment
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ENVIRONMENT
Environment
American Eagle Outfitters, Inc. is committed to
developing better business practices to promote a
cleaner and healthier planet.
We hear repeatedly from associates and customers through social media, focus groups, and internal
surveys that they want us to take meaningful steps to respect our environment. Although we are still
in the early stages of implementing our environmental strategy, we are encouraged by progress from
our initial efforts and continue to explore additional ways to reduce our environmental footprint. Our
associates are our greatest asset in this effort: many of our programs today exist due to the efforts of one or
a few visionary people who had an innovative idea to help make our company “greener.”
Our environmental program is built on three pillars: conserving resources, minimizing waste, and
improving our products and packaging.
“I had been traveling a bunch and started thinking about the environmental implications of
all the jet fuel and ways to off-set my carbon footprint. I got to thinking that there might be
others who felt the same. So I asked if we had a program to offset the footprint of employee
travel.”
- ISOBEL S., ASSOCIATE DESIG N DIREC TOR, WOMEN’S K NITS
At Isobel’s suggestion, we implemented a Carbon Offset program in partnership with the Student Conservation
Association. Associates can now make donations to purchase trees to offset business travel, and AEO, Inc. will
match the donations. The trees are then planted in national parks and forests by SCA interns.
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Conserving Resources
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ENVIRONMENT
CONSERVING RESOURCES
We’ve introduced measures to reduce the use of energy, water, and other natural
resources in many areas of our company.
Pittsburgh Corporate Office Location
In 2007, we made a landmark decision to move our corporate world headquarters
to the South Side neighborhood of Pittsburgh, Pennsylvania. Once home to many
steel mills, the city of Pittsburgh has undergone a dramatic transformation in
recent years with the revitalization of former industrial sites. As a local company,
we wanted to support this urban renaissance.
Today, our corporate headquarters sits on a brownfield site on the banks of the
Monongahela River. Once home to a steel mill, the site has been cleared of all
lingering contaminants and is now a lush green landscape dotted with parks,
restaurants, shops, and office buildings. We are proud to call it home.
Energy Audit of Corporate Office
In July 2010, we conducted an energy audit of our main corporate office in
Pittsburgh. The audit assessed our performance on energy, water, and waste, as
well as the use of environmentally-friendly materials and innovation in design.
The audit highlighted several important areas in our operations, in particular,
opportunities to improve energy efficiency. Improving office energy efficiency is
now a key priority for 2012.
Energy Reduction in Distribution Centers
We have introduced several initiatives over the past few years to reduce energy
consumption in our three distribution centers.
Lighting Retrofits
In July 2010, we began a lighting retrofit project at our largest distribution facility
in Kansas. The project included updating lighting fixtures and adding lighting
sensors. We replaced 911 1000-watt fixtures with 480-watt high efficiency
fluorescent fixtures, and we swapped out another 114 480-watt fixtures with 354watt fixtures. We were also able to replace half of the 1000-watt fixtures located in
outside parking areas. This reduction in wattage and the use of motion sensors also
reduced our air conditioning needs. Our projected energy savings from the Kansas
lighting retrofit is 7,741,469 kilowatt hours per year - an annual reduction of 38%.
We are planning to implement similar lighting retrofits at our other two
distribution centers in the near future. In the meantime, bulbs that burn out in our
other two facilities are replaced individually with higher efficiency fixtures. We
have also installed motion sensor lighting in less-trafficked areas, such as offices,
restrooms, and parts of the warehouse floors. When the buildings are empty, all
lighting is manually shut off and HVAC settings are adjusted to reduce energy
consumption.
“White” Roofs and HVAC Units
We have reduced our energy usage at our Kansas and Pennsylvania distribution
centers by installing white roofs, which absorb less heat from the sun and lower
cooling needs in the summer months. At our Kansas facility, the entire roof was
replaced with a white surface. In Pennsylvania, one third of the roof was replaced
during the summer of 2010 and we hope to replace another sizeable portion in the
near future. In the Pennsylvania distribution center, we also replaced 12 HVAC
rooftop units with high efficiency SEER-15 units. The energy reduction has been
considerable: our new HVAC units on the white roof portions have run 30% more
efficiently since installation.
Energy Reduction In Stores
In May 2010, we introduced a new lighting policy for store management. All store
lighting panels are now color-coded, with each color representing the time of day
at which certain lights should be turned on. Before stores are open to customers,
minimal lights are used. More lights are gradually turned on throughout the day to
accommodate store and customer needs.
In June 2010, we also introduced a policy instructing our open-air lifestyle center
stores to keep their doors closed year-round so that we don’t waste energy trying to
heat or cool outdoor space.
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ENVIRONMENT
Conserving Resources (continued)
Our newest New York flagship store, which opened in November 2010 in
Manhattan’s Soho neighborhood, is a leading example of energy efficient design.
The Soho store was designed to utilize energy-efficient electronic displays. Multiple
seven-foot tall displays are located throughout the three-story, 24,000 square-foot
store. Three columns in the main entrance provide window displays and instore branding. Four additional columns, located at each escalator, help to guide
customers throughout each level of the store. These innovative displays use up to
75% less power than traditional backlit or projection technology-based products.
This reduction in power usage decreases the amount of heat generated, which in
turn reduced our need for air-conditioning.
Water
Water plays an important role in the manufacturing of textile products. Water is
necessary to wash and dye garments to create the look and feel envisioned by our
designers.
Unfortunately, water usage in textile production has led to negative environmental
impacts, including shortages of fresh water and contamination of water sources
when appropriate wastewater precautions are not taken. The Pearl River Delta in
Guangdong, a province on the southern coast of China, has been particularly hard
hit. Numerous manufacturing facilities in this region have been cited as a major
cause of contamination for that region’s water sources.
In 2007, we joined Business for Social Responsibility (BSR)’s Sustainable Water
Group (SWG)50 to learn about ways to minimize the potential negative impact of
our own products and explore industry-wide efforts to reduce the negative impact
of manufacturing on global water sources. The SWG is a partnership of five global
apparel companies committed to responsible wastewater practices in global textile
supply chains.
The SWG uses industry-developed Water Quality Guidelines51 to help companies
mitigate the potential harmful impacts and business risks from global operations.
50 http://www.bsr.org/en/our-work/working-groups/sustainable-water-group
51 http://www.bsr.org/reports/awqwg/BSR_AWQWG_Guidelines-Testing-Standards.pdf
In 2007, we began monitoring water quality test reports submitted by supplier
mills and laundries. After analyzing these reports, we realized that the data we
were receiving was not comparable between facilities because different local
governments test by different standards of sampling, water quality parameters,
and other methodologies. As a result, we implemented a new process in 2010 to
physically extract our own samples to ensure consistent, accurate test results using
BSR standards for our top denim laundries. The results showed that all of the tested
suppliers met their local standards for water quality, but seven out of ten fell short
when it came to the more stringent SWG standards. These seven suppliers were
sent corrective active plans and we are currently working with them to develop
clear, achievable goals for improvement, which may include external advisory
services, on-site consultations and re-testing.
We know that many stakeholders share our desire to ensure that apparel laundries,
mills, and other manufacturing facilities around the world discharge clean water
back into the environment. In June 2011, we were contacted by Greenpeace, which
had concerns about water discharge from Well Dyeing, a fabric mill in southern
China. Although we no longer had any programs in development with Well
Dyeing, we did respond to Greenpeace’s request to engage in their Detox Challenge
campaign. A copy of our response is available here52.
Carbon Emissions In Transportation
We don’t own or operate the planes, cargo ships, and trucks that transport our
products from factories around the world to our stores. But we have been working
actively with our transportation partners to monitor and promote greater fuel
efficiency.
We have begun to reduce our usage of fuel-intensive transportation methods
between US ports and distribution centers. In 2010, we converted approximately
90% of our freight from truck to rail between the port of Long Beach, California
- one of the key entry points into the United States for our merchandise - and
our distribution center in Kansas. This initiative not only reduced our reliance
52 http://www.ae.com/Images/corpResp/images/environment/Greenpeace_Letter_110812.pdf
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ENVIRONMENT
Conserving Resources (continued)
on expensive fuel associated with trucking, but also helped reduce our emissions
between the port and our distribution center.
We have also begun to track the carbon footprint of our transportation network,
with an initial focus on ocean vessel and domestic truck transportation. We are
still in the beginning stages of this process but hope to provide more data on
carbon emissions in future reports.
Promoting cleaner transportation
We do not own or operate our own transportation fleet. However, meaningful
reduction in the total carbon footprint of our supply chain is important to us.
For years, we have expected our transportation suppliers to deliver quality and
timely service. Now we are asking them where possible to take meaningful steps to
reduce fuel usage and minimize their reliance on the most polluting forms of fuel.
Sustainable Practices in Cafes
Our Pennsylvania corporate office locations and US distribution centers all boast
cafes managed by Guckenheimer55, an external catering company. Guckenheimer
is firmly committed to sustainability in restaurant services, emphasizing not only
nutrition and healthy meal choices for our associates, but also utilizing energyconserving restaurant equipment and offering local and organic produce, organic,
free-range, grass-fed and naturally raised poultry, pork, lamb, and hormone-free
beef, cage-free shell eggs and hormone-free dairy products.
NEXT
Minimizing Waste
Many of our domestic transportation suppliers participate in the SmartWay
Transport Partnership53, a collaboration between the U.S. Environmental
Protection Agency (EPA) and the U.S. freight industry. SmartWay seeks to lower
the environmental impacts of freight operations by providing incentives for
carriers to improve fuel efficiency and reduce carbon emissions, greenhouse gases
and air pollution. All of AEO, Inc.’s domestic truck-load (TL) and less-thantruckload (LTL) carriers, who move shipments from US ports to our distribution
centers, are SmartWay-certified. In addition, 43% of our Delivery Agents, who
move shipments from consolidation points to our stores, are certified, and another
14% are currently working towards certification.
Recently, we sent a letter54 to our transportation partners asking them to share
more information with regards to their practices to reduce fuel consumption
and minimize reliance on the most carbon-intensive forms of fuel, including
fuel derived from oil sands. We plan to formalize our request for transportation
partners to prioritize cleaner fuel sources into our contractual process later this
year.
53 http://www.epa.gov/smartwaylogistics/index.htm
54 http://www.ae.com/Images/corpResp/images/environment/usatruck_20110831.pdf
55 http://www.guckenheimer.com/
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ENVIRONMENT
MINIMIZING WASTE
Minimizing Waste
Recycling Initiatives
We have comprehensive recycling programs in place at our corporate office and
distribution centers in the U.S. and Canada.
In our corporate offices, recycling bins are located in copy rooms, cafes, kitchens,
and at each associate’s work space. We recycle plastics (including cups, containers
and utensils), metal cans, glass bottles and jars, paper, and cardboard. Every year
in August, we also hold a two-week-long “Clean and Green” event to encourage
associates to dispose of confidential corporate documents that are no longer
needed in an environmentally-friendly manner.
We recycle an even wider array of products in our distribution centers according
to the different materials utilized within these facilities. Commonly recycled items
include cardboard (including empty shipping boxes), batteries, aluminum cans,
toners, paper, and plastic bales and shrink wrap.
While we are not yet able to quantify our recycling efforts in our New York and
Kansas locations, our 2010 efforts in our Pennsylvania and Canada facilities
yielded 183,951 tons of paper and 6,021 tons of cardboard bale recycling that would
have otherwise gone to a landfill.
Donation Of Damaged Goods
When our goods are damaged during manufacturing or transportation, the last
thing we want to do is send them to a landfill. We’ve put considerable effort into
developing partnerships with organizations that can recycle or reuse damaged
goods. In 2010, we donated:
• 33,000 pairs of ripped jeans to Habitat for Humanity to be recycled into housing
insulation. This was enough denim to insulate 66 new homes for victims of
Hurricane Katrina.
• 15,374 new, single shoes to the National Odd Shoe Exchange, a foundation
which caters to people who need single shoes or pairs of different sizes due to
amputation, club feet, leg braces, diabetes, or other disabilities.
• 138,000 pieces of broken jewelry to Materials for the Arts (MFTA). MFTA
provides free materials to charitable and educational organizations for use in arts
programs.
In addition, we collect non-denim ripped garments that we receive from customer
returns and factories. Once we have an entire container load, we send these
items to Leigh Fibers to be shredded and utilized in the manufacturing of car
dashboards, carpet insulation, speaker stuffing, and similar products.
For more information on our partner organizations, please visit the following sites:
• Habitat for Humanity
http://www.habitat.org
• Leigh Fibers
http://www.leighfibers.com
• Materials for the Arts
http://www.mfta.org
• National Odd Shoe Exchange
http://www.oddshoe.org
Paper Reduction in Corporate Offices
Although paper is a fixture in all corporate offices, we’ve been working to reduce
our overall paper consumption.
In 2010, we transitioned our internal newsletter, AE Life, from a printed
publication to an electronic-based version. The magazine, which is approximately
20 pages in length, is published three to four times a year. With our new online
“e-zine,” we have reduced the number of printed copies by 98% from approximately
135,000 copies to just 2000 copies per year. These remaining paper copies will
be printed on paper certified by the Forest Stewardship Council (FSC) and will
contain up to 35% post-consumer recycled material.
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ENVIRONMENT
MINIMIZING WASTE
Minimizing Waste (continued)
We also recently introduced a “paperless payroll” option for associates. Associates
also have the option to view pay statements online. Today, 96% of corporate
associates, 94% of distribution center associates, and 52% of stores associates
participate in the paperless payroll program. So far, it has proven to be convenient,
cost-effective, and good for the environment.
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Product Innovation
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ENVIRONMENT
PRODUCT INNOVATION
Product Innovation
Reduced Packaging
Use of Recycled Content in Paper Materials
In May 2009, we introduced new environmentally-friendly requirements for
suppliers who pack and ship our merchandise. Our new policy requires suppliers to
use single-wall corrugated shipping cartons, which replace the double- or triplewalled cartons previously used. In addition, we increased our packing density
standards, requiring that more units be packed into each carton. As a result, our
shipping carton density increased 5.1% in the 12 months after the policy change.
Not only did this new policy improve container utilization, but it also reduced the
total amount of packaging needed to transport our goods, reducing paper waste as
well as carbon emissions and fuel usage in our supply chain.
We avidly use email, text messages, and social media to stay connected to
our customers. However, we have found that direct mail is still an important
way to communicate with our customers, so we have taken steps to make this
communication ‘greener.’ Currently, about 23% of the paper we use in our direct
mail activities is made with some recycled content.
PAPER COMPOSITION
POUNDS
30% Recycled Content & Made With Wind Power
265, 278
Shopping Bags, Gift Boxes & Shoe Boxes
The vast majority of paper shopping bags used in our American Eagle Outfitters,
Aerie and 77kids stores are made from 100% post-consumer recycled material and
are recyclable. In addition, most American Eagle Outfitters and 77kids gift and
shoe boxes are made from 100% post consumer recycled material. Our Aerie gift
and shoe boxes currently contain about 30% recycled content.
AEO Outlet stores use plastic shopping bags that contain 60% recycled material
and are also recyclable.
30% Recycled Content
77,936
10% Recycled Content
433,907
100% Recycled Content & Made With Wind Power
T O TA L
1,422
778,543
Direct Mail Printed Materials - Recycled Content Breakdown
Environmentally-Friendly Products
We took our first step towards introducing environmentally-friendly products with
the launch of an “Eco Shop” in our Holiday 2010 collection. Available exclusively
online, the shop offered men and women’s apparel made from certified organic and
recycled materials. Many styles were made from organic cotton, which is grown
without the use of harmful synthetic pesticides and results in fewer fossil fuel
emissions than conventional cotton. Other styles were made from recycled content,
which gives new life to materials that would have otherwise ended up in landfills.
Policies Against Animal Cruelty
American Eagle Outfitters, Inc. strictly prohibits the use of real animal fur and
Australian mulesed wool in all of our products. We are also against the use of
animal testing on our products.
NEXT
Environment Goals
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ENVIRONMENT
ENVIRONMENT GOALS
Environment Goals
2011-12 Environment Goals
• Improve corporate office energy efficiency based on results of July 2010 energy
audit.
• Measure and expand reporting on recycling efforts in company-owned facilities.
• Conduct company-wide carbon footprint to identify key opportunities for
emission reduction.
• Formalize internal structure to manage Environmental Affairs across
the company. Establish a strong organizational structure, as well as clear
responsibility and accountability for the program.
NEXT
Associates
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ASSOCIATES
Associates
Be individual. Think broadly. Be real.
Be distinct.
These principles are the inspiration behind Live Your Life, Love Your Job - the theme
that runs through our company, our brand, our culture. We strive to be an employer of
choice - a place where people are excited to come to work because they believe in what
we do, enjoy working with each other, and have fun doing it.
“AEO has a unique culture of accommodating people. In my job, I interact
with everyone from Jim O’Donnell to our cleaning crew. People here have
an ability to cross lines and departments and help out with just about any
project or problem. You never hear people say, “that’s not my job.’ They
usually say, “let me look into it” - and then they go do it without fanfare.
I like the fact that doors are always open and you can talk or ask a favor
of most anyone in the company. In many companies, people don’t interact
with other departments, but here it’s the norm. Everyone knows at least a
few people in each department and almost everyone is friendly and willing
to talk!”
NEXT
- HERB C., FACILITIES
Our Values
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ASSOCIATES
OUR VALUES
Our Values
We believe the best way to live our lives and love our jobs is to live our values.
Our five core company values are:
• People
• Integrity
• Passion
• Innovation
• Teamwork
These values capture our company spirit and drive our organizational vision and
goals. They are prominent in our Associate Performance Evaluations and serve as
key criteria for our recognition programs.
Our Live Your Life Love Your Job campaign is an extension of these values. It
inspires our work. It drives us to treat our fellow associates with respect. It is the
frame of mind that guides our brand and our culture.
“When AEO was getting ready to launch our children’s clothing line,
the company needed to add an extra product safety layer to many
people’s roles and responsibilities. Universally, throughout the
company, these new roles were embraced without objection. It was
clear that, in order to provide the safest possible product to our
customers, this was something we had to do and do well...and it was
done. To me, this reflects the integrity of the people working for the
company.”
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- REBECCA G ., LEG AL
Compensation & Benefits
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COMPENSATION & BENEFITS
American Eagle Outfitters, Inc. strives to maintain a competitive compensation
and benefits structure.
We view compensation as a combination of base salary and short- and long-term
incentives. We work to pay our associates fairly based upon market research, data,
and statistics. All associates have the opportunity to earn some form of incentive
pay. We encourage our associates to save for retirement through our matching
401(k) program. Associates also have the option to participate in our Employee
Stock Purchase Plan (ESPP). We will match 15% of each Associate’s bi-weekly
contribution to the ESPP up to $100 per pay period.
We offer an array of benefits to promote the health and wellness of our associates.
Full-time and part-time associates are eligible for comprehensive medical, dental
and vision coverage. To encourage everyone to live a healthier lifestyle, we
maintain state-of-the-art fitness centers at our Corporate Office in Pittsburgh
and in our Kansas and Canadian distribution centers. Corporate and distribution
center associates who are not based in these locations are eligible to receive a gym
reimbursement benefit.
Finally, at American Eagle Outfitters, Inc., every day is “casual Friday.” We
encourage everyone to be themselves, to wear the brand, and to be creative in their
work and work attire. Our office environments provide collaborative work spaces
to encourage cross-functional teams to gather informally in comfortable, casual
settings. Oversized sofas, chairs, picnic tables and benches adorn the open areas in
our Pittsburgh and New York offices to help promote teamwork and camaraderie.
Hardships
We strive to take care of our associates when they face major hardships. Over the
years, we have provided clothing, gift cards, food, lawn service, and maid service
to associates that have experienced tragedies in their lives. We also encourage
associates to work from home when they need to be with a family member.
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Communication & Retention
We recognize the importance of balancing work and family life. In addition to
a generous Paid Time Off (PTO) plan, we offer a number of work/life programs,
including paid maternity leave, new dependent leave options, adoption assistance,
tuition reimbursement, and back up child care assistance.
We also have a long-standing tradition of Early Out Fridays every summer to help
our associates spend more quality time with their families. Between Memorial
Day and Labor Day, all corporate associates may leave between 12 and 2 p.m.
Distribution Center associates enjoy Early Outs during non-peak periods of time.
Store district managers and above are eligible for two Free Fridays throughout the
summer.
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COMMUNICATION & RETENTION
We strive to be an open environment - open to listening, open to new ideas.
At our Corporate Office, New York Design Center, and Distribution Centers in
Pennsylvania, Kansas, and Canada, our CEO and senior leaders hold regular
roundtable discussions with randomly selected groups of associates. These sessions
provide an open forum in an intimate setting for associates to ask questions and
speak directly with senior leadership.
We encourage an open-door culture based on two-way dialogue and feedback, and
we strive to foster open discussion and questions between associates and managers.
We support the right of free association for all associates, and a trade union
represents associates in our Canadian distribution center.
“I am a long time AE associate. Long story short, I filled out a survey
and got called into a meeting with Jim [O’Donnell]. I didn’t even know
what a “round table” meeting was about, but I learned quickly that
it had to do with my feedback on the survey. I was anxious and he
seemed angry, but this meeting ended up being one of my proudest
AE moments. The fact that our CEO took time out of his busy schedule
to hear my feedback and that he genuinely cared about my input was
fantastic. The AE culture has taught me so much about collaboration,
believing in yourself, and embracing new ideas. And by the way, I
received a personal follow up e-mail from Jim.”
• Three Regional Store Management Meetings per year, which are followed by Take
It Back meetings between store managers and store associates.
•C
ustomer First, which defines our approach to communication throughout the
company and strives to ensure that every customer leaves our stores happier than
when they walked in. Customer First reminds us that - like every associate - each
AEO, Inc. customer is an individual with unique needs, and that we should be
real and ready for every person who walks through the door.
•C
ommunication Center for store associates, which provides personalized selling
goals, promotional news and new product knowledge to ensure associates are
adequately equipped to meet each customer’s unique needs.
•A
EOTV, a beloved cornerstone of Communication Center, which provides upto-the-minute, short training videos featuring product knowledge and selling
tips directly from our design team. AEOTV segments are shot in a “behindthe-scenes” environment which helps store associates understand our design
inspiration and the hottest fashion trends.
• Our confidential Speak Up Program for corporate associates to speak with the
Human Resources team, and an Alert Line which is managed by an independent
third-party and anonymously connects store associates with Human Resources.
• The confidential AE Hotline56, which provides a toll-free phone number and
secure website managed by an independent third-party for associates to voice
serious concerns.
- CINDY D., FINANCE
Key highlights of our communication channels include:
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Diversity
• Regular CEO-led meetings for all office and distribution center associates to hear
from senior leadership and ask questions about the company’s past, present, and
future.
•A
E Life, our intranet and quarterly e-magazine.
• Monthly Distribution Center Chats.
• Daily Start-Up Meetings held in the Distribution Centers by each department
supervisor to discuss shift goals, safety information and campus events.
56 http://www.aehotline.com/
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DIVERSIT Y
Diversity
We are an equal opportunity employer and strive to treat our associates with
respect and dignity. Our diverse workforce provides our business with many
benefits, including enhanced creativity, different approaches to problem solving,
and the ability to work effectively in our diverse markets.
Workplace Culture Policy
We are committed to selecting, developing, and rewarding the best person for
the job, based on the requirements of the work to be performed, and without
regard to race, color, national origin, religion, disability, marital status, age, sexual
orientation, genetic information, gender, gender identity and expression, or any
other basis protected by federal, state, or local law. We forbid discrimination of all
kinds, whether directed at associates, applicants, suppliers, vendors, customers, or
visitors. This policy applies to all terms and conditions of employment, including
recruitment, hiring, promotion, compensation, benefits, training, discipline and
termination.
We believe the work environment should foster respect for one another and
provide a setting for one to work hard, learn, and grow. We do not tolerate
harassment or workplace behavior - whether committed by a fellow associate,
leader, contractor, customer, or supplier - that intimidates, offends, degrades, or
humiliates another person. This prohibition applies whether the harassment is
based on one’s protected status or not.
Workplace Culture Training
Our commitment and values are reflected in our Code of Ethics57 and our
Workplace Culture Policy58. These policies are provided to every new hire and
discussed in orientation. We educate every associate on these policies through a
combination of computer-based and live Workplace Culture Training. Associates
are then required to participate in refresher courses to ensure that they continue to
understand and live by these values in our workplace.
&t=1
58 http://www.liveyourlifeloveyourjob.com/document/Workplace_Culture_Policy.pdf
Reporting Concerns
Associates have multiple channels - including the confidential AE Hotline59 through which they can report potential violations of our Code of Ethics60 and our
Workplace Culture Policy61. We take every report seriously and investigate each
claim. If we find that a violation has occurred, we take prompt and effective action
to ensure that the behavior does not occur again. We do not tolerate retaliation
against associates for reporting potential violations - period.
INROADS Partnership
In 2007, we established a new and exciting partnership with INROADS. INROADS
Interns are the best and brightest ethnically diverse high school and undergraduate
students in North America. These outstanding students typically rank in the top
10% of their senior class and aspire to professional and leadership careers. The
INROADS Retail Management Institute (RMI) is designed to develop outstanding
ethnically diverse students for executive careers in retail. To date, our INROADS
interns have worked in Management, Marketing and Store Operations. We are
optimistic about the future of this promising partnership.
Looking Ahead
We recognize that we still have work to do to improve the gender and ethnic
diversity of our company. Nevertheless, we have made progress. Since 2006, the
total percentage of non-Caucasian minorities in our company increased from 19%
to 29%. Women holding Executive roles (Vice President and above) increased from
25% in 2006 to 37% in 2011.
For more detail on our diversity statistics, please click here62.
59 http://www.aehotline.com/
&t=1
61 http://www.liveyourlifeloveyourjob.com/document/Workplace_Culture_Policy.pdf
62 Page 46
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DIVERSIT Y
DIVERSIT Y STATISTICS
Diversity (continued)
2.49% 0.55% 3.41%
Diversity Statistics
G ENDER
DIV ERSIT Y
E THNIC
DIV ERSIT Y
29%
A S O F M A R C H 2011
0.64%
8.57%
A S O F M A R C H 2011
FEMALE
M U LT I P L E E T H N I C I T I E S
MALE
N AT I V E A M E R I C A N
13.65%
ASIAN
71%
AFRICAN AMERICAN
70.69%
PAC I F I C I S L A N D E R
L AT I N O
C AU C A S I A N
COMPANY TOTAL
COMPANY TOTAL
0.08% 2.03%
0.51% 6.67%
0.08%
2%
2%
3.54%
34%
63%
37%
66%
CORPOR ATE
87.09%
E X ECUTIVE
96%
CORPOR ATE
0.56%
2.63% 3.37%
E X ECUTIVE
9.04%
0.68%
0.79%
1.57%
0.34% 0.79%
0.11%
2.58%
28%
47%
53%
14.38%
72%
FIELD
69.34%
DISTRIBUTION CENTER
FIELD
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Hiring & Training
93.82%
DISTRIBUTION CENTER
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HIRING & TR AINING
Hiring & Training
We seek to attract talented people who want to grow and be part of a great team.
Our recruiting philosophy is built on our company’s vision and values. We look
for people who are friendly, respectful of others, open-minded, team-oriented,
innovative, flexible, action-oriented, and passionate about what they do. Our
recruiting website Live Your Life Love Your Job63 offers a view into our culture and
hiring process.
Associate Orientation
We get one chance to get each associate’s new orientation right. Associates in the
Corporate Office, New York Design Center, Distribution Centers and Field are
welcomed through our AEO New Orientation program. AEO New Orientation
guides the new associate through their first full year, with a special focus on the
first 90 days.
Ongoing Development
We maintain a variety of learning and development avenues to meet the diverse
training needs of our people.
The Associate Experience provides an interactive course curriculum for store
associates on defined success factors and core values. The curriculum begins
with an industry-leading, interactive onboarding program about our brand and
products led by a designated store trainer. Store associates are then introduced to
Customer First, which defines AEO, Inc.’s approach to communication and strives
to ensure that every customer leaves our stores happier than when they walked
in. Finally, store associates continue their development through Communication
Center, which provides personalized selling goals, promotional news and new
product knowledge, and AEOTV, which provides up-to-the-minute, short training
videos featuring product knowledge and selling tips directly from our design team.
Achieving Excellence is our 16-week entry level training program for
merchandising and planning & allocation. Every year, we recruit approximately
30 college students from major universities across the country and associates from
63 http://www.liveyourlifeloveyourjob.com/
our stores. Achieving Excellence provides a combination of classroom training,
field experience, interoffice exposure and on-the-job training. Upon successful
completion, associates are placed into areas that best suit their skill sets.
The AEO Internship Program64 is an important way that we discover and recruit
future company leaders. The program is designed for college students who have
finished their junior year of study. AEO, Inc. internships offer talented individuals
the opportunity to experience a fast paced retail environment with the potential
of a full-time offer after graduation. Internships are available in a variety of
divisions, including Merchandising and Planning & Allocation. Furnished
housing, including rent and utilities, is provided for students that do not live in the
Pittsburgh area.
In 2007, the New York Design Center also launched our Design Assistant Trainee
Program, offering full-time permanent placement for fashion design graduates.
This program helps us to hire top talent and build bench strength for future
growth.
Finally, our Mentoring Program pairs senior executives (Mentors) with high
performing associates (Proteges) in a nine month one-on-one mentoring
relationship to foster stronger partnerships between current and future leaders of
the business. Promotion rates of Proteges over the past four years have exceeded
80%.
Recognition
Our company is successful when our people are successful. In 2010, we celebrated
our associates’ achievements at all levels, ranging from awards to sales associates
for building customer connections and driving sales performance to excellence
awards for distribution center associates to our Eagle of the Year, our top annual
award which recognizes an associate who has made an outstanding contribution to
the company.
64 http://www.liveyourlifeloveyourjob.com/college_internships.aspx
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HIRING & TR AINING
Hiring & Training (continued)
In 2010-11, our Eagle of the Year was Stan D., Senior Maintenance and Facilities
Manager at our Kansas Distribution Center. Stan spearheaded an energy- efficient
lighting and HVAC overhaul project at the distribution center, which resulted in
significant environmental and financial savings.
“The lighting retrofit for the Kansas DC was a conscious effort to
conserve energy and reduce the carbon footprint of the DC. Just
a few short years ago, to get adequate lighting in the DC, we had
to add an additional fixture for every existing two, which increased
the cost immensely. With new technology, we were able to swap
fixture for fixture. That alone justified the project with a two year
return on investment (ROI). But adding strategically-placed automatic
lighting brought an expected one year ROI and it now looks like our
investment will be recovered in nine to ten months. To be successful
in today’s business atmosphere you have to make smart decisions. I’m
thankful that American Eagle looked at this project as a win for the
environment, as well as a cost-savings opportunity”
offer many opportunities for corporate and distribution center associates to take
advantage of company-sponsored tickets to sporting events.
Every year, associates have opportunities to attend a variety of events, including
the Pittsburgh Steelers and University of Pittsburgh Panthers at Heinz Field, the
Pittsburgh Penguins at Consol Energy Center, the Pittsburgh Pirates at PNC Park,
the New York Yankees at Yankee Stadium and the New York Mets at Citi Field, the
Kansas City Chiefs at Arrowhead Stadium and Kansas City Royals at Kauffman
Stadium, and University of Kansas football and basketball.
Pittsburgh-based associates may also attend concerts at Stage AE®, where some of
the coolest new bands perform.
In early 2011, American Eagle Outfitters, Inc. was also the presenting sponsor of
the Big East basketball tournament, which provided our New York-based associates
with the opportunity to attend some of the season’s most sought-after college
basketball games.
- STAN D., FACILITIES
Every quarter, we also recognize associates who have gone “above and beyond” in
their jobs as Eagle’s Elite. A panel of Vice Presidents and above selects recipients
who demonstrate excellence and have gone beyond the scope of normal job
responsibilities. Winning individuals and teams come from many different
divisions of the company.
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2010 Business Challenges
We also encourage associates to recognize each other in real time through our
High Five program. Winners receive a choice of gift cards and a High Five
certificate to display in their work areas. In early 2011, we also began profiling
High Five winners on our company-wide intranet. In FY2010 and through the
first quarter of 2011, associates in our corporate offices and distribution centers
recognized fellow teammates with more than 660 High Five awards.
Sports and Events Tickets
With Pittsburgh, PA, New York, NY, Kansas, and Canadian-based based corporate
office and distribution center locations, we are a sports-minded culture. We
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2 010 BUSINESS CHALLENGES
2010 Business Challenges
The retail business has gone through an enormous change over the past few years.
In 2008, the economy suffered major upheaval. While recovery has begun, the
challenging times are not yet over. The result of this turmoil has brought about a
dramatic change in the consumer mindset toward shopping and value. Our 15- to
25-year-old customer has been particularly affected.
While 2009 and 2010 were difficult in many ways, we also learned valuable
lessons that might not have been so clear in better times. For example, we have a
deeper understanding of our customers, their perception of our brand, and their
expectations in terms of fashion and value pricing. Additionally, we’ve made
pivotal changes in our leadership teams, especially in merchandising and design.
In 2010, we launched a company-wide initiative designed to resurrect the
fundamental principles that brought about past success and create new success
and growth through innovation. The goal is to work together to simplify and
streamline our organization and maintain a laser-like focus on the elements that
drive our business forward. We invited every associate to submit his or her ideas
about ways the company can become more efficient and effective. As of summer
2011, we had received more than 250 ideas from nearly 200 associates representing
every office, distribution center location and store region - and ideas continue to
pour in. Every idea is responded to, evaluated and tracked to completion - and
many have already been implemented.
Unfortunately, this project did include some reductions in staff in 2010. However,
in each area, we have worked hard to minimize the number of people affected and
treat those who left the company as fairly as possible.
We believe that, at the end of these business challenges, American Eagle Outfitters,
Inc. will emerge an even better company, with an even brighter future. That future
will create more career and growth opportunities for everyone involved.
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Associate Goals
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ASSOCIATE GOALS
Associate Goals
2011-12 Associate Goals
• Strengthen focus on associate development, including pilot of new performance
management system that places greater emphasis on career development.
• Increase focus on leadership training for senior managers.
• Simplify work-life experience; identify additional opportunities to provide the
“gift of time.”
• Implement Customer First initiative and continue implementing opportunities
identified through Back to the Future strategy.
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Community
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Community
American Eagle Outfitters, Inc. is committed
to investing in and giving back to the
communities that contribute to our success.
In 1999, we established the American Eagle Outfitters Foundation to maximize the
impact of our efforts and formalize our commitment. Through the AEO Foundation,
we strive to create positive change in areas that are important to both our customers
and associates, including youth development and environmental conservation. Our
giving takes many forms, ranging from national charity partnerships to customer
engagement initiatives to major community initiatives, international giving and
associate activities.
In 2010, charitable giving for the company and the AEO Foundation surpassed $3
million. For more information on how your organization can request a gift card
donation or a grant from the AEO Foundation, click here65.
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National Charity Partnerships
65 http://www.ae.com/Images/corpResp/images/community/gift_cards_and_financial_grants.pdf
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NATIONAL CHARIT Y PARTNERSHIPS
One of the key ways we strive to bring about positive social change is through
strong, long-standing partnerships with charities that make a difference.
with thousands of others across the U.S. and Canada to read to more than 2
million children.
Jumpstart
Student Conservation Association
66
Since 1997, AEO, Inc. and the AEO Foundation have supported Jumpstart , a
national early education organization headquartered in Boston that works toward
the day every child in America enters school prepared to succeed. Through
extraordinary attention in yearlong relationships, Jumpstart inspires children
to learn, adults to teach, families to get involved, and communities to progress
together. Each year, Jumpstart pairs over 3,500 trained college students in one-tothree ratios with preschool children in need of assistance. Since 1993, Jumpstart
has trained more than 20,000 college students and community volunteers to
deliver its program to more than 90,000 preschool children nationwide.
The Student Conservation Association (SCA)67 is a national conservation force
of high school and college students who protect America’s natural resources
and restore our environment. SCA members serve every day, in every state, as
environmental stewards, rangers, researchers, educators and in other critically
needed capacities. Rendering two million hours of service annually, SCA
volunteers make substantial contributions to the improvement and preservation of
America’s public lands while developing a powerful ethic of conservation service.
Since 1957, SCA’s hands-on programs have helped to build new generations of
conservation leaders, inspire a lifetime of stewardship, and help save the planet.
When we joined forces with Jumpstart, we became its first national sponsor. We
were also the founding sponsor of Jumpstart Pittsburgh and Jumpstart’s official
clothing provider, supplying the organization’s college student mentors - known
as Corps members - with their Jumpstart uniform of hats, t-shirts, and hoodies.
American Eagle Outfitters, Inc. also provided t-shirts for children enrolled in the
program.
AEO is currently the presenting sponsor of SCA’s Alternative Spring Break
program. This distinctive program sends dozens of college students from across the
United States to national parks, such as the Grand Canyon, to complete two weeks
of conservation service.
Since then, we have developed several campaigns to celebrate Jumpstart Corps
members, including the annual AE Spirit of Service Awards, which pay tribute to
outstanding leadership and recognizes select students with a college scholarship.
By showcasing young people who make a difference in their community, we honor
Corps members, inform our customers about Jumpstart, and inspire young people
to be active and responsible citizens.
American Eagle Outfitters, Inc. is also a founding national sponsor of Jumpstart’s
Read for the Record, a campaign to raise awareness about the importance of early
education - and also set a world record for the largest shared reading experience
ever. During the fifth annual campaign in 2010, our associates participated along
66 http://www.jstart.org/
AEO is also the major sponsor of SCA’s recruiting activities on approximately
300 college campuses and high schools nationwide. As part of our 2010 holiday
marketing theme, “Reclaim the Outdoors,” we partnered with SCA to underwrite
five unique environmental preservation projects in Pittsburgh, Washington, D.C.,
Houston, Seattle and Detroit.
Big Brothers Big Sisters
Big Brothers Big Sisters (BBBS)68 is justly renowned for success in youth
mentoring. BBBS’s mission is to help children reach their potential through
professionally supported one-to-one relationships with measurable impact. The
organization serves 5,000 communities across America with a quarter of a million
active matches. In Canada, BBBS works in 1,000 communities supporting more
67 http://www.thesca.org/
68 http://www.bbbs.org/
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NATIONAL CHARIT Y PARTNERSHIPS
National Charity Partnerships (continued)
than 30,500 matches. BBBS also works with major companies who understand the
value of successful mentoring. In 2006, American Eagle Outfitters, Inc. launched
a partnership with BBBS through a signature fund raising event, Bowl For Kids’
Sake. In 2010, associates from our stores, distribution centers and Corporate
Office all took part in Bowl For Kids’ Sake events, and the AEO Foundation
donated $150,000 to help BBBS achieve sustainable growth to serve more children
throughout the U.S. and Canada.
Many associates in our Corporate Office, New York Design Center and
Distribution Centers participate in BBBS’s workplace mentoring programs. Our
volunteers are actively engaged with their Littles and speak enthusiastically about
their experiences, both with the BBBS program and with the Littles themselves.
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Customer Engagement
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CUSTOMER ENGAGEMENT
Customer Engagement
American Eagle Outfitters, Inc. is proud to create innovative opportunities for
our customers to support their local communities, and help people in need when
disaster strikes around the world.
Big Sisters of America72 and Big Brothers Big Sisters of Canada73 - one of our key
charity partners. All customer donations were matched by the company.
Earth Day
77kids hosted a holiday program in 2010 called WISH4SNOW to benefit eight
children’s hospitals across the country. 77kids customers were invited to make a
77-cent donation to children’s hospitals with each in-store purchase. Customers
who donated were rewarded with a 77kids “Ya Done Good, Kid” badge sticker and
bumper sticker. Additionally, customers visited www.77kids.com to make “virtual
snowflakes” stating their holiday wish. Once 100,000 snowflakes were designed,
77kids by american eagle donated an additional $25,000 which was split evenly
among the eight hospitals.
To help commemorate the 40th anniversary of Earth Day in the U.S., we invited
our customers to donate to the Student Conservation Association’s69 programs that
empower young people to conserve the environment. American Eagle Outfitters
matched all customer contributions and made an additional donation to SCA in
honor of the AEO store that raised the most funds. Additionally, we partnered with
SCA on an Earth Day sweepstakes, featuring a shopping spree at American Eagle
Outfitters and other prizes.
77kids also took part in Earth Day by partnering with Plant-It 202070. For every
sales transaction that took place on Earth Day, 77kids donated $1 to Plant-It 2020
to plant a tree. In all, 1,287 trees were planted.
Breast Cancer Awareness Month
In support of Breast Cancer Awareness month, Aerie donated $1 for every bra sold
to Bright Pink71, ultimately raising $50,000. Bright Pink is a national non-profit
organization that provides education and support to young women who are at
high risk for breast and ovarian cancer. They arm young women with knowledge,
options and a positive attitude, and offer companionship and empathy during their
journey. Bright Pink empowers women to take control of their breast and ovarian
health, and in turn, realize the freedom and peace of mind to live a beautiful and
fulfilling life.
WISH 4 SNOW
Villanova T-Shirts
American Eagle Outfitters hosts activities on a variety of college campuses.
In 2010, we donated T-shirts to Villanova University’s74 “The Saint Thomas of
Villanova Volunteer Day.” On that day, 6,000 students, faculty, administration and
alumni banded together and committed to perform a full day of volunteer service
in the Philadelphia community.
NEXT
Major Community Initiatives
AEO Friends And Family
American Eagle Outfitters added a charity component to our annual Friends and
Family festivities in 2010. Customers were invited to donate a dollar to Big Brothers
69 http://www.thesca.org/
70 http://www.plantit2020.org/
71 http://www.bebrightpink.org/
72 http://www.bbbs.org/
73 http://www.bbbsc.ca/
74 http://www.villanova.edu/
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MAJOR COMMUNIT Y INITIATIVES
AEO, Inc. makes large contributions to causes in the communities in which we
live, work and play.
The panel selected 23 winners from high schools in the Pittsburgh Public Schools
system as well as Pittsburgh charter high schools.
AEO Foundation Grants
The winners received a new laptop computer, and a gift card from American Eagle
Outfitters for a new back-to-school wardrobe. They were also treated to lunch at
our corporate headquarters hosted by our CEO, Jim O’Donnell.
In 2010, the AEO Foundation made 40 grants totaling $126,500 to non-profit
organizations in Pittsburgh, New York City, Kansas, and in Canada. The grants
supported a variety of youth development and student-related environmental
conservation programs.
In Pittsburgh, one grant was awarded to Womansplace and The Consortium
for Public Education to expand their Expect Respect teen dating violence
prevention program in area high schools. In New York City, we supported New
York Cares’ Youth Service Environmental Program which teaches students about
environmental conservation efforts and practices. In Canada, a grant to MADD
enabled the organization to present its Assembly Program, “Shattered,” to high
school students to raise awareness about the dangers of driving under the influence
of alcohol or drugs. In Kansas, a grant to Headquarters Counseling Center, the
leading suicide prevention organization in the state, helped upgrade its current
crisis hotline system and allow more people to reach the calling center.
Pittsburgh Promise
In our Corporate Office community in Pittsburgh, American Eagle Outfitters
hosted an essay contest for graduating high school seniors and made a $100,000
donation to The Pittsburgh Promise75. The Pittsburgh Promise is a transformative
program designed to help students in Pittsburgh Public Schools plan, prepare, and
pay for education at an accredited post-secondary institution within the state of
Pennsylvania.
Riverlife
Since 2000, Riverlife76 has been connecting the people of Pittsburgh with one of
the city’s most valuable natural resources - its rivers. In 2010, we made a $50,000
contribution to Riverlife to help complete the South Shore Riverfront Park, a
28-acre facility on the banks of the Monongahela River. The park is adjacent to
our corporate campus and will provide the residents of Pittsburgh with another
wonderful outdoor space.
Ottawa Community Partnership
In November 2010, American Eagle Outfitters, Inc. made a $100,000 donation to
the Ottawa Community Partnership in Kansas, the home of one of our distribution
centers, to help build a YMCA. Ottawa is a small town with a population of 12,887.
Our contribution will help to build the community’s first community wellness,
recreation and gathering center. In addition, the YMCA will provide programming
to make the region’s young people better students and citizens, foster healthy
diversity and provide wellness opportunities for all ages.
NEXT
International Initiatives
We invited eligible students to describe their personal vision for the city of
Pittsburgh, and what they would do to help realize that vision. The winners were
selected by a panel of American Eagle Outfitters associates, based on vision,
commitment to action, creativity, plausibility, grammar, spelling, and punctuation.
75 http://www.pittsburghpromise.org/
76 http://www.riverlifepgh.org/
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INTERNATIONAL INITIATIVES
World Vision
“Help Haiti Heal” Graphic T-Shirt
In 2010, American Eagle Outfitters, Inc. donated more than 107,000 T-shirts,
shorts, pants, skirts, shoes and personal care items were donated to World
Vision77, a humanitarian organization dedicated to tackling the causes of poverty
and injustice by working with children, families, and their communities. World
Vision serves close to 100 million people in nearly 100 countries around the world
regardless of religion, race, ethnicity, or gender.
To mark the first anniversary of the 2010 earthquake in Haiti, Concern Worldwide
U.S.81 and American Eagle Outfitters partnered to raise funds to rebuild and
support schools in the country. Limited-edition, AE-designed “Help Haiti Heal”
T-shirts were sold in American Eagle Outfitters stores throughout the U.S. and
at ae.com. The T-shirts were made in Haiti, by Haitians, to raise awareness about
the continuing need to help Haiti heal. Thanks to the support of a Concern
Worldwide donor, 100% of all sales were donated, raising more than $414,000 for
the continuing Haitian recovery.
Haiti & “Hear To Help” CD
When the devastating earthquake rocked Haiti at the beginning of 2010, American
Eagle Outfitters responded by making a $50,000 donation to Mercy Corps78 to aid
in relief efforts. In partnership with Filter Magazine, we also offered our customers
an exclusive compilation CD to benefit relief and recovery efforts in Haiti. The CD,
entitled “Hear to Help,” was sold in all AEO stores across the U.S. and Canada and
on-line at ae.com. 100% of the $10 retail price was donated to Oxfam America79.
The effort raised nearly $100,000 to provide water, latrines, plastic sheeting, and
relief materials to Haitians in need after the earthquake.
Pakistan Flood Relief
In July 2010, monsoon rains led to massive flooding and mudslides that devastated
many regions of Pakistan and affected more than 20 million people. American
Eagle Outfitters, Inc. supported flood relief efforts by making a $50,000 donation
to Oxfam America82 and matched all associate donations to Oxfam. Oxfam helped
provide nearly 1.9 million people with water, sanitation, shelter, and livelihood
support.
Haiti & International Medical Corps
Business Council For Peace
When the cholera epidemic hit Haiti in October 2010, American Eagle Outfitters,
Inc. responded by making a $2,500 donation to International Medical Corps.
International Medical Corps80 prioritizes health care for vulnerable groups in
Haiti. Their primary health care clinics target the displaced, those under the
highest risk, and those with little or no access to affordable health care. They
have provided more than 160,000 patient consultations through a network of 13
primary health care clinics serving the city of Port-au-Prince as well as rural areas
throughout Haiti.
The Business Council for Peace83, better known as Bpeace, believes the path to
peace is lined with jobs. Put simply: Bpeace believes that more jobs mean less
violence. Bpeace is a non-profit network of business professionals who assist
entrepreneurs in conflict-affected countries to help create significant employment
and expand the economic power of women. The organization’s goal is to create one
million jobs across 1,000 communities. In 2010, American Eagle Outfitters, Inc.
made a $2,500 donation to Bpeace to help launch their program in El Salvador.
77 http://www.worldvision.org/
78 http://www.mercycorps.org/
79 http://www.oxfamamerica.org/
80 http://www.internationalmedicalcorps.org/
81 http://www.concernusa.org/
82 http://www.oxfamamerica.org/
83 http://www.bpeace.org/
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COMMUNIT Y
INTERNATIONAL INITIATIVES
International Initiatives (continued)
Vietnam Children’s Fund
In 2007, American Eagle Outfitters, Inc. donated $62,500 to the Vietnam
Children’s Fund84 to help build a school in the Long An province near Ho Chi
Minh City, Vietnam. The goal of the Fund is to move beyond the past tragedies
of Vietnam’s many wars and look to the future by building schools. In December
2009, one of our senior executives met with local students and teachers in the Long
An province and helped dedicate the new school building.
NEXT
Associate Activities
84 http://www.vietnamchildren.org/
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COMMUNIT Y
ASSOCIATE ACTIVITIES
Our associates love to be part of and give back to their local communities. We host
a variety of activities throughout the year to make it easier for all of us to make a
difference.
Eagles in the Region
Through our Eagles in the Region program, our U.S. and Canadian community
captains help locate local non-profit organizations that support the American Eagle
Outfitters Foundation mission of encouraging youth development and conserving
the environment. They also seek out opportunities where associates can come
together to volunteer as a team.
For example, in 2010, several Eagles in the Region advocates combined their
quarterly donations to support Operation Warm85. This charity provides winter
coats to children in need in several U.S. markets. Our donation of $9,500 provided
much needed coats to nearly 650 children.
Eagles Team of Ten
Our Eagles Team of Ten program is a global initiative designed to support
our associates’ volunteer efforts by providing a $500 donation to charitable
organizations where at least 10 associates participate together in a community
service or fundraising project. In 2010, our associates took part in 42 Team of Ten
projects throughout the U.S. and Canada, leading to donations of $21,000.
Matching Gifts
We encourage our associates to contribute to their favorite non-profit organizations
and matches donations on a dollar-for-dollar basis to eligible institutions
throughout the United States and Canada. We also host special matching gift
opportunities throughout the year. For example, in August 2010 after the oil spill
in the Gulf of Mexico, we matched donations made to the Student Conservation
Association, which was actively engaged with the U.S. Fish & Wildlife Service and
other local organizations in the rescue of pelicans, sea turtles and other species
that were harmed by the tragedy.
85 http://www.operationwarm.org/
Live In These
In conjunction with our 2010 Back To School “Live In These” marketing campaign,
we encouraged associates to donate gently used jeans to teens in need in their local
communities. Associates in our stores, distribution centers and corporate offices
took part and donated more than 5,000 pairs to local homeless shelters.
The Mission Continues
In honor of our associates who serve our country, we made a $2,500 donation to
The Mission Continues86 on Veterans Day 2010. The Mission Continues offers
service fellowships to wounded and disabled veterans and organizes volunteer
projects aimed at engaging veterans, as well as the public, in volunteer service. The
organization’s vision is to build an America where every returning veteran can
serve again as a citizen leader, and where together we honor the fallen by living
their values through service.
Holiday Drive
Every holiday season, we strive to go the extra mile to serve in our local
communities. Some of our associates provide holiday gifts to local foster children,
while others donate to their local food banks or adopt a family to provide gifts. In
2010, our Pittsburgh-based corporate office associates provided holiday gifts for
more than 200 local children and teens in need.
NEXT
Community Goals
86 http://www.missioncontinues.org/
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COMMUNIT Y
COMMUNIT Y GOALS
Community Goals
2011-12 Community Goals
• Provide more opportunities for our customers to participate in our community
endeavors and serve in their local communities.
• Develop a strategy for international giving which aligns with our corporate values
and supply chain footprint and improves the quality of life in less developed
regions of the world.
• Establish a philanthropy task force to examine our current national charity
partners and explore opportunities to align further with our company and
associate values and priorities.
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AE BE T TER WORLD
FREQUENTLY ASKED QUESTIONS
FAQs
Q: How long have you been committed to Corporate Responsibility?
A: AEO, Inc. has been committed to being a responsible company for years. This
is our first comprehensive report documenting the details of human rights in
our supply chain, sustainability and environmental initiatives, our workplace
culture, and our philanthropic efforts.
Q: Do you use sweatshops?
A: American Eagle Outfitters, Inc. is committed to ensuring that the people who
make our clothes are treated with dignity and respect. For more information
on how we’re working to promote good working conditions in apparel factories
around the world, please click here87.
Q: I want to work for American Eagle Outfitters, Inc. How do I apply?
A: American Eagle Outfitters, Inc. strives to be an employer of choice - a place
where people are excited to come to work because they believe in what
we do, enjoy working with each other, and have fun doing it. Visit www.
liveyourlifeloveyourjob.com to learn more and browse current employment
opportunities.
Q: Do you use child labor?
A: American Eagle Outfitters, Inc. has a zero tolerance policy when it comes to
child labor and sweatshops. Any factory that is found to be in violation of this
principle must adhere to our strict remediation policy or face termination of our
business relationship. For more details, visit our Code of Ethics88 and Vendor
Code of Conduct89.
Q: How can I get involved and help you build a Better World?
A: There are many ways to help build a Better World. Here are a few examples:
Q: What do you do if you find a child working in one of your factories?
A: If a child is found in a factory producing for American Eagle Outfitters, Inc.,
our first priority is to take action that serves the best interests of that child. We
require that the child be immediately removed from the workplace and that the
supplier pay for the child’s continued schooling, as well as an ongoing salary.
Once the child has reached legal working age, the factory is also required to
provide him or her with employment, if desired. This child labor policy was
informed by “best practice” guidelines outlined by well-regarded civil society
organizations, trade unions, and multi-stakeholder organizations in the apparel
industry. For more information about our efforts to improve factory working
conditions, click here 90.
• Pay attention to the clothes you buy, including information about the people who
helped make them. If you can’t find information from a company, ask questions.
• Pay attention to the products you use, and how you dispose of them. Reduce, reuse
and recycle whenever possible!
• Mind your energy consumption-car pooling, biking and turning out lights when
not in use are easy ways to start.
• Look for volunteer opportunities in your community and beyond.
• Explore the AE Better World website to learn more about AEO, Inc.’s efforts and
the organizations we participate in and support around the world.
• Follow AEO on Facebook and Twitter!
87 Page 15
&t=1
90 Page 24
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FAQs (continued)
Q: How many factories does American Eagle Outfitters, Inc. work with and in
what countries around the world, etc.?
A: American Eagle Outfitters, Inc. works with approximately 330 factories in more
than 20 countries around the world. We strive to seek out apparel suppliers who
share our commitment to worker safety and well-being and will work to meet or
exceed national and international labor standards.
Q: Why aren’t American Eagle Outfitters, Inc. products made in America?
A: As a global company, we work with manufacturers worldwide, including in
the United States, to make our products. We also partner with a number of
organizations overseas to run our franchise stores. We have stores in Canada,
the Middle East, Hong Kong, China, Russia, and plans to expand to Israel and
Japan, among others.
Q: How do you know the workers in the factories that make your products are
being treated humanely?
A: American Eagle Outfitters, Inc. has a Vendor Code of Conduct, which is based
on universally accepted human rights principles and sets forth our expectations
for suppliers, who must agree to comply before we do business with them. The
Code must be posted in every factory that manufactures our clothes in the local
language of the workers.
A
EO, Inc. also has a dedicated team of people, and a comprehensive factory
inspection, remediation, and training program focused on improving working
conditions in the global apparel supply chain. To read more about efforts to
improve global factory working conditions, click here 91.
Q: How is American Eagle Outfitters, Inc. trying to reduce its carbon footprint
and support the environment?
A: American Eagle Outfitters, Inc. is committed to developing better business
practices to promote a cleaner and healthier planet. Although we are still in the
early stages of implementing our environmental strategy, we are encouraged
by progress from our initial efforts and continue to explore additional
ways to reduce our environmental footprint. For additional details on our
environmental program, click here 93.
Q: Can the shopping bags in American Eagle Outfitters, Inc. stores be recycled?
A: The vast majority of paper shopping bags used in our American Eagle
Outfitters, Aerie and 77kids stores are made from 100% post-consumer recycled
material and are recyclable. In addition, most American Eagle Outfitters
and 77kids gift and shoe boxes are made from 100% post consumer recycled
material. Our Aerie gift and shoe boxes currently contain about 30% recycled
content. AEO Outlet stores use plastic shopping bags that contain 60% recycled
material and are also recyclable.
Q: Do you sell fur products? Do you have any policies to prevent cruelty to
animals?
A: American Eagle Outfitters, Inc. strictly prohibits the use of real animal fur and
Australian mulesed wool in all of our products. We are also against the use of
animal testing on our products.
Q: Does American Eagle Outfitters, Inc. use sandblasting on its jeans?
A: Our AE, Aerie, and 77kids brands are no longer developing new styles with
sandblasting. By Spring 2012, we will no longer have any sandblasted styles on
our store shelves. For more information, please click here 92.
Q: Does American Eagle Outfitters use organic materials in its products?
A: We took our first step towards introducing environmentally-friendly products
with the launch of an “Eco Shop” in our Holiday 2010 collection. Available
exclusively online, the shop offered men and women’s apparel made from
certified organic and recycled materials. Many styles were made from organic
cotton, which is grown without the use of harmful synthetic pesticides and
results in fewer fossil fuel emissions than conventional cotton. Other styles
91 Page 15
92 Page 22
93 Page 33
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AE BE T TER WORLD
FAQs (continued)
were made from recycled content, which gives new life to materials that would
have otherwise ended up in landfills. For more information about our Product
Innovation efforts, click here 94.
Q: Why doesn’t American Eagle Outfitters offer non-treated denim to customers?
A: Denim is a cornerstone of the American Eagle Outfitters brand, and we offer a
wide range of fits and washes to customers. At this point, our customers have
not shown a significant interest in un-treated denim. That said, we are always
evaluating new product ideas and might decide to offer some form of un-treated
denim in the future.
Q: What percentage of your employees are minorities? What programs do you
have in place to ensure diversity?
A: We believe in an inclusive work environment that reflects our core values.
Since 2006, the total percentage of non-Caucasian minorities in our company
increased from 19% to 29%. Women holding Executive roles (Vice President
and above) increased from 25% in 2006 to 37% in 2011. We have a Workplace
Culture Training program that promotes the philosophy of identifying elements
within ourselves and others that make each of us unique. For more information
about diversity at AEO, Inc., please click here 95.
Q: Are your products safe? Have you ever had any product recalls?
A: AEO, Inc. is strongly committed to the safety and well being of our customers.
We require our products to meet all applicable U.S. state and federal and
Canadian national laws and regulations. To ensure compliance, we maintain an
extensive set of safety testing protocols for our products.
I n rare cases where a safety issue has been discovered in a product that has
reached our store shelves, we respond with a comprehensive recall process.
We publicly maintain a list of product recalls conducted in conjunction with
94 Page 39
95 Page 45
the Consumer Product Safety Commission (CPSC) here96 on our e-commerce
website. For more information on how we work to ensure the safety of our
products, please click here 97.
Q: How do you decide what music to play in the stores and how loud it should be?
A: Creating a fun and dynamic shopping environment for customers and work
environment for associates is among AEO’s top priorities. The music in our
stores is played at levels fully in compliance with industry standards. We also
have a policy of turning the music down upon customer request.
Q: How do you develop your marketing programs?
A: Marketing programs for each brand are developed by the company’s internal
department, and strive to reflect the unique brand DNA for each concept.
Each aspect of a campaign, from the models to the location to the photography
style is designed to showcase the product, but also to inspire customers and
encourage them to express their own personal style through our brands.
Q: How does American Eagle Outfitters, Inc. decide what non-profit organizations
to support?
A: American Eagle Outfitters, Inc. created its overall giving philosophy based on
input from customers, associates and other stakeholders. Currently, the AEO
Foundation focuses on causes related to youth development and environmental
conservation. Our corporate giving takes many forms, ranging from national
charity partnerships, to customer engagement initiatives, major community
initiatives, international giving and associate activities.
Q: How much money does American Eagle Outfitters, Inc. donate each year?
A: It varies from year to year. However, the company’s total annual contribution
ranges in the hundreds of thousands to millions of dollars in cash and in-kind
support, plus thousands of hours of volunteer time from AEO, Inc. associates
worldwide.
96 http://www.ae.com/web/help/product_recalls.jsp?topic=1
97 Page 11
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FAQs (continued)
Q: I want to request a gift card or grant from the AEO Foundation. How do I do
this?
A: AEO, Inc. donates a limited number of $25 gift cards to college and high school
sponsored drug-free volunteer events that strive to keep teens and college
students safe.
E
ach year, the AEO Foundation also allocates a limited number of grants to
non-profit, public charities in Pittsburgh, New York City, Ottawa, Kansas,
and Mississauga, Ontario with tax exempt status under Section 501(c) (3) of
the Internal Revenue Code which fall within the scope of its mission. Before
an organization is considered for a donation, it must fulfill several criteria.
For specific information on requesting gift cards or grants from the AEO
Foundation, please click here 98.
98 http://www.ae.com/Images/corpResp/images/community/gift_cards_and_financial_grants.pdf
63
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CONTACT US
Contact Us
Like what you see here? Have an idea about how to Live Your Life in a Better
World?
We’d love to hear from you.
Send us a note at: [email protected].
64
AE BE T TER WORLD
GRI INDE X
GRI Index
Global Reporting Initiative (GRI) Index
This report conforms to the Global Reporting Initiative (GRI) G3.1 guidelines for
Application Level C. The report also includes many indicators from Application
Level B and the industry-specific Apparel and Footwear Sector Supplement.
ABOUT US
ENVIRONMENT
About Us
2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.9, 3.5, 3.6, 4.8
Environment
4.17
CEO Letter
1.1
Minimizing Waste
EN26
About This Report
3.1, 3.2, 3.3, 3.5, 3.6, 3.7
EN5, EN18, EN26
Our Stakeholders
2.2, 2.5, 3.4, 3.5, 4.12, 4.13, 4.14, 4.15, 4.16
Product Innovation
EN26
2.3, 4.1, 4.2, 4.3, 4.4, 4.9
Environmental Goals
Guiding Principles
3.5, 4.8, 4.9, AF1
Protect, Respect, Remedy
3.5, 4.12, AF4
ASSOCIATES
Codes & Governance
3.5, 4.8, 4.9, AF1, AF2, AF26, HR6, HR7
Our Values
4.8
PR1, PR2, PR4, 4.12
EC3
4.13, 4.14, S05
4.14, 4.16
Diversity
LA13
Our Products
Public Policy
Diversity Statistics
SUPPLY CHAIN
Supply Chain
AF1, AF2
2.5, HR6, HR7, AF2, AF3, AF6, AF8
Our Factory Inspection
Program
AF2, AF3, AF6, AF16
Factory Training &
Capacity Building Efforts
2.5, AF4, AF5, AF6, AF16
Associate Goals
Customer Engagement
AF5, AF6, AF17
Leveraging Collective Efforts
2.5, 4.12, 4.13, 4.14, 4.15, 4.17, HR6, HR7, AF6
Our Performance
2.5, 3.6, 3.9, HR6, HR7, AF6, AF7, AF8, AF9, AF10, AF11,
AF12, AF13, AF14, AF15, AF16, AF25
LA11
COMMUNITY
aking Smarter Business
M
Decisions
LA13
2010 Business Goals
Our Strategy
Hiring + Training
AF33
AF33
LA13
Community Goals
LA11
2010 Business Goals
Associate Goals
Supply Chain Goals
65

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