American Eagle posted a quarterly profit beat that leaned on a $161 million tariff refund on Wednesday.

  • Quarterly earnings were $0.79 a share, versus $0.45 cents a year ago, thanks to the tariff refunds clocked in the quarter.
  • After four quarters of awareness spending — malls, campus rush, soccer star Lamine Yamal — American Eagle is moving money into digital ads that close sales, the company said. 
  • Management guided third-quarter comps to the mid- to high-single digits: Aerie in the high teens to 20%, American Eagle roughly flat.

Shares of American Eagle Outfitters (AEO) fell about 10% after-hours on Wednesday after the company posted a profit beat that leaned on a $161 million tariff refund and guided American Eagle same-store sales to be only flat for the rest of the year as it pivots away from big advertising campaigns.

Revenue for the quarter was $1.38 billion, up 8%, with comparable sales up 6%. Earnings were $0.79 a share, versus $0.45 a year ago, thanks to the tariff refunds clocked in the quarter. Without the refunds, however, the quarter would have looked significantly weaker.

Aerie Did The Heavy Lifting

Aerie brand, including its activewear line OFFLINE, was the engine. Sales jumped 25%, and comps rose 19%, to $536 million. Apparel, intimates, and activewear all grew. President Jen Foyle said the brand is now “comping the comp” — growing on top of last year’s already-strong numbers. She pointed to monthly drops, sleep-to-street outfits, the new Float bra, and a 20-year Happy Booties campaign.

Aerie’s awareness is still only about 59%. American Eagle sits near 76%. Foyle said the goal is to close that gap, or pass it. Asked about sexier intimates such as the Show Off line and sheer bras, she said, Aerie can do “sexy in our way.”

The namesake brand, meanwhile, grew 1% in sales and slipped 1% in comps, an improvement from spring. Men’s segment posted a fourth straight positive-comp quarter. Women’s denim is turning toward low-rise, wide-leg, and straight fits, but leftover and older styles still need markdowns.

Ads: Off The Big Campaigns

After four quarters of awareness spending — malls, campus rush, and soccer star Lamine Yamal — American Eagle is moving money into digital ads that close sales, “away from bigger campaigns and top of funnel.” Foyle said the job now is to get shoppers into stores and close the sale. Advertising should start to leverage in the fourth quarter and into 2027, management said. 

Sydney Sweeney’s “Great Jeans” ads last summer sold out her signature pair in a week and brought American Eagle a surge of new customers. — the kind of splashy awareness buy American Eagle is now moving away from.

Aerie will keep doubling down on digital, in-store events, and social media promotion. The company will also invest in product and marketing ahead of AEO’s 50th anniversary in 2027.

A Cautious Second Half

Management guided third-quarter comps to the mid- to high-single digits: Aerie in the high teens to 20%, American Eagle roughly flat. Third-quarter operating income is expected to be $110 million to $115 million.

Full-year operating income is now expected at $540 million to $550 million, including the refund, on mid-single-digit comps. That range is higher than May’s $390 million to $410 million because the refund is now included. Underneath it, the back half was trimmed. In May, American Eagle was expected to grow low single digits in the second half. It is now guided flat, with a markdown placeholder still in the plan.

How Did Retail Traders React?

On Stocktwits, retail sentiment around AEO stock rose from ‘bullish’ to ‘extremely bullish’ over the past 24 hours, while message volume increased from ‘high’ to ‘extremely high’ levels.

AEO stock has fallen 36% year-to-date. 

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