American Eagle Outfitters merchants had planned a promotion this spring to clear out any dresses that didn't sell quickly enough, but the South Side teen retailer never had to use it.

"We didn't have to mark down a dress," said James O'Donnell, CEO of the company that spent much of last year slashing prices to clear out fashions consumers decided they didn't need to have.

Mr. O'Donnell took a few minutes after the annual shareholders meeting at the company's SouthSide Works headquarters yesterday to talk about both the past year and the one ahead.

In the fiscal year ended Feb. 2, sales at established stores fell 10 percent, and problems were evident even before the economy really went bad in the fall. Last summer, the president and chief merchandising officer informed the company she wouldn't be returning after her contract expired and Mr. O'Donnell moved to trim management layers.

The structural changes seemed to free up design and merchandise teams that may have been playing it safe in the past. "We've eliminated some arduous second-guessing," Mr. O'Donnell said.

That may have helped in producing the successful dress line. He predicted the next few months would bring the introduction of other merchandise and marketing innovations that should help build the excitement the company's young core clientele wants.

"As a company, we're focusing on small wins," he said. "Together, they'll add up to significant progress."

Although it can take awhile to turn around a product line, American Eagle worked hard over the past year to weed out inefficiency and cut administrative expenses. The company also slowed new store development.

Shareholders at yesterday's meeting voted to give three board members new three-year terms. Janice E. Page, 60, is a retired former Sears executive on the board since 2004. J. Thomas Presby, 69, a former partner in Deloitte Touche Tohmatsu, has been an American Eagle director since 2005. Gerald E. Wedren, 72, president of a Washington, D.C., merger and acquisitions firm and former fast-food operator, has been a director since 1997.

Mr. O'Donnell, who noted he'd been through tough times before, plans to stick around, too. His contract calls for his term as CEO to end this fiscal year but he said he'd been asked to return for more.

On a different matter, Mr. O'Donnell said American Eagle expected work on a second building at its headquarters site to be completed by Labor Day.

The company moved from Marshall into its current 186,000-square-foot building near the Hot Metal Bridge in 2007. Within 18 months, the company expects to have about 500 employees on the South Side.

The new 150,000-square-foot structure will house staff from the company's online operations and its 77kids brand, which is now sold only on the Internet. Mr. O'Donnell said the children's line has built a small but loyal group of customers that the company hopes to expand. The first 77kids bricks-and-mortar stores could open by the second half of 2010.

American Eagle shares closed yesterday at $13.55, down 62 cents, or 4.4 percent.