American Eagle executives on Wednesday said that this fall they will be launching a line of CBD beauty products in stores in partnership with Seventh Sense, a personal care line from Canadian CBD company Green Growth Brands (GGB). Seventh Sense products are already sold through American Eagle's website.
CEO Jay Schottenstein declined to provide details during a conference call with analysts. "We're going to be issuing this coming fall and we have a special name for it," he said, per a Seeking Alpha transcript. "We have a special kick-off and we're going to surprise everybody. So we're not going to tell you now. It will be very exciting."
Green Growth Brands is publicly traded in Canada and earlier this year announced plans to set up Seventh Sense shops at hundreds of malls across the U.S., in partnerships with CBL & Associates Properties and Simon Property Group.
American Eagle may be bypassing the emerging softness in beauty sales by tying its new effort to the burgeoning market for products laced, however benignly, with CBD.
The global cannabis market, both licit and illicit, has reached $150 billion, but by 2025 legal cannabis will take over to encompass 77% of the market, or $166 billion, according to Euromonitor International. "Within 10 years, cannabis will be a regular part of daily routines," Zora Milenkovic, Euromonitor head of drinks and tobacco, said in a statement. "From a functional ingredient to an intoxicating buzz, cannabis will reshape fast-moving consumer goods, with food, beverages, beauty, health and tobacco having the most potential for disruption."
U.S. regulators are scrambling to work out what that means for what technically remains, at best, a legally ambiguous area. But the market has apparently deemed cannabidiol (or CBD) good to go because of its non-psychoactive properties. Along with the American malls, several U.S. retailers, up and down the market, have moved to offer CBD beauty and wellness products, including CVS, Walgreens and Barneys New York. Apparel rival Abercrombie & Fitch in June also announced a tie-up with Seventh Sense, with products already in stores. If Schottenstein's reference to a "special name" suggests the company is developing a private label, that could be an important differentiator.
Except for Barneys, whose "High End" effort also embraces the recreational aspects of cannabis, most retailers are touting the putative (though poorly researched and hardly proven) wellness attributes of CBD oil. GGB has tried to avoid that by emphasizing personal care and making no health care claims. "We are not making any claims regarding the benefits of CBD, again, a no-no per the FDA," a GGB spokesperson told Retail Dive in an email earlier this year. "We also want to be clear that our CBD products are not psycho-active and will not create a high. We will say that these are fantastic products that standalone tremendously as personal care products and have the added element of CBD."
Schottenstein said the new line will be launched in time for the holidays and emphasized the segment's potential for the company, whose shares dropped after its second quarter report suggested some softening of the apparel market. "And as far as the beauty business, we're just getting our toe into the water," he said, adding that the company is "very gung ho" about that for both this year and next.