Interesting recent discussion (on RetailWire) about why American Eagle failed in its attempt to create a kids’ spinoff. I start with the name as the first misstep:
American Eagle has built up considerable brand equity, and despite some of its recent struggles its comp sales appear to be back on track. (And it is doing a better job than some of its competitors like Aeropostale learning how to execute “fast fashion.”) But AEO did not take advantage of that brand equity when it launched 77kids.
I realize that Justice has been more successful under its own brand than previously (as Limited Too), but in this case American Eagle might have tried to be more patient with the concept. Testing the concept with bricks and mortar might (in hindsight) have been a more effective idea than starting out online.