AEO - American Eagle sees advantages with shareable supply platform

American Eagle Outfitters ( NYSE: AEO ) has become aggressive in modernizing its supply chain since hiring Shekar Natarajan almost four years ago to run that side of the business.

The mall retailer has acquired two supply chain businesses for several hundred million dollars and Natarajan has helped make AEO's supply platform shareable with other companies.

The two new businesses form the core of AEO's supply chain platform, which operates independently from the retailer.

The new strategy is based in part on how Natarajan's belief that small companies can not directly compete in logistics with retail giants like Amazon and Walmart, but could benefit by pooling their resources together.

Per Associated Press, AEO's end game is a model that will take all the packages coming from different distribution centers and then funnel them to a consolidation center with one package delivered to the shopper.

Read the post-earnings breakdown on AEO from Seeking Alpha author Nikola Lapenna.

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