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Business Basics Are Hallmark Of Retail Exec's Tenure

McGallaOf the 10 great ideas Susan McGalla acts upon each day, nine of them aren’t hers.

That’s a dynamic McGalla, president and chief merchandising officer of American Eagle Outfitters, chalks up to her style of effective leadership: creating an environment conducive to new concepts, then inspiring people to deliver on a vision.

“I don’t think it’s all that complicated,” McGalla told an audience of Tepper MBA students at standing-room only event in Mellon Auditorium. McGalla appeared as part of the W.L. Mellon Speaker Series, a forum which gives students the opportunity to engage in high-level exchanges about strategy, world affairs, and other key issues with CEOs and leading business executives. The series includes student-only breakout sessions to encourage lively discussions with speakers in small-group settings with various student clubs.

Indeed, McGalla’s formula for success does seem deceptively simple: she emphasizes passion, focus, work ethic and people skills. After 14 years at American Eagle, she declines to cite numbers as to how long her typical workweek lasts, because to her, “it doesn’t feel like work.”

“I don’t know if it’s 50, 60, or 70 hours a week,” McGalla says. “I don’t think of it that way. I love to go.”

Despite improvements in time management and “work-smarter” initiatives, McGalla notes that there is no substitute for a roll-up-the-sleeves work ethic. But she warns that such dedication can lead to losing the focus on people that is integral to effective leadership.

Susan recalls, "I became very focused on executing tasks in my new role as president and spent less time with my team. I took a step back and became refocused on the fact that people are what matter.

The soft skills are the hard skills,” McGalla emphasized. “For the first five to seven years in management, a person’s technical know-how will take priority, but that expertise eventually will even out among a person’s peers. What makes a leader emerge from the pack is the soft skill set, she says.

“To move an army all in one direction is harder than it sounds,” she says.

Under McGalla’s stewardship, the percentage of total revenue that American Eagle realized from the women’s retail category grew from 15 to 60 percent.

“It changed the landscape of the company,” she says.

Today, the multibillion-dollar brand includes its flagship American Eagle clothing line, aimed at high school and college students; “aerie,” a lingerie brand; “Martin + Osa,” whose target demographic is 28 and older; and the new “77 Kids” brand, debuting this fall, for children ages 2 to 10.

In McGalla’s world, the ideal customer starts with American Eagle, then graduates to Martin + Osa, then purchases 77 Kids for a child, thus re-starting the branding purchase cycle.

In January 2009, McGalla will leave American Eagle, a planned exit that she calls “bar none, the toughest decision of my life.” But she adds, “You have to know when to pass the baton. I feel excited and energized … I hope in 10 years, they’re at $10 billion.”
 

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Mark D. Burd

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Tepper School of Business
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mdburd@andrew.cmu.edu
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