American Eagle's logistics struggles to achieve profitability
The Head of American Eagle's Logistics Subsidiary, Quiet Platforms, Is Out.
American Eagle Outfitters built a logistics arm by acquiring two firms in 2021.
After spending more than $350 million, the combined entity is called Quiet Platforms.
Two leaders have left and the firm needs a "reset," according to a spokesperson.
The head of American Eagle's logistics arm Quiet Platforms is out as the outfit struggles to achieve profitability, according to an internal memo to staff obtained by Insider.
Shekar Natarajan was president of Quiet Platforms until he left the company last week, according to the memo. He worked for the retailer for roughly five years in senior supply chain management positions, according to his Linkedin profile.
Quiet Platforms is a wholly-owned subsidiary of American Eagle Outfitters. It was built by combining fulfillment and logistics firm Quiet Logistics, which the retailer acquired in 2021 for $350 million, and a much smaller parcel logistics startup called AirTerra, acquired the same year.
AirTerra founder Brent Beabout, who was COO of Quiet Platforms, has also left the company, according to two sources with knowledge of the situation.
Beabout and Natarajan did not respond to requests for comment.
In his memo to staff announcing Natarajan's exit, American Eagle COO Michael Rempell said that, while the logistics subsidiary had been "tremendously beneficial to AEO," it had "not achieved the plans we laid out for it." Citing macro headwinds, Rempell wrote that workforce reduction was necessary.
Natarajan chose to leave as a result of the changes, according to the memo.
An AEO Inc. spokesperson echoed Rempell's comments about growth in the logistics unit, adding: "We must pull back on expenses to reset the business. This is necessary to improve profitability, particularly given prevailing macro headwinds. We believe Quiet will continue to deliver results for AEO, and over time has the potential to be a meaningful and profitable third party logistics provider. With the support of our experienced leadership team, we remain focused on driving the business forward."
The spokesperson did not provide details on timing, method, or quantity for the "workforce reduction."
AEO assembled Quiet at the height of the e-commerce boom when fulfillment centers and parcel carriers were strapped for capacity and retailers were looking for new options. It seeks to improve e-commerce logistics for AEO and other brands beyond. Now that the pace of online orders has slowed, there is more slack in the market and it is more difficult to compete with legacy providers.
Natarajan was a vocal advocate for the unique position of American Eagle to band together small and medium-sized retailers in order to have more sway in the broader e-commerce logistics market. He frequently appeared in the press and spoke at industry conferences evangelizing Quiet's strategy and value proposition as a retailer-owned logistics company, which is a relatively new phenomenon in e-commerce.
