American Eagle Outfitters Inc. (NYSE:AEO) posted third-quarter results that surpassed analyst expectations, driven by strong momentum at its Aerie brand and a rebound at the core American Eagle chain, and raised its full-year guidance despite ongoing tariff pressures.
The retailer reported net revenue of $1.36 billion, up 6% from a year earlier, with comparable sales rising 4%.
Aerie led the company’s growth, which saw an 11% jump in same-store sales, while the core brand rose 1%.
A summer denim campaign featuring actress Sydney Sweeney contributed to a surge of 790,000 new customers and rapid sell-outs of key items.
Looking ahead, American Eagle raised its fourth-quarter comparable sales guidance to 8% to 9% and boosted full-year operating income expectations to $303 million to $308 million, up from a prior range of $255 million to $265 million, even as tariffs continue to pressure margins. The company expects gross margins to decline year-over-year but anticipates incremental net tariff benefits of about $50 million in the fourth quarter and $70 million for the full year.
Shares jumped 13% in Wednesday trading, extending a five-month rally that has more than doubled the stock.
Jefferies analysts highlighted the strength of Aerie and the retailer’s marketing campaigns, noting that collaborations with Sydney Sweeney and NFL star Travis Kelce generated over 44 billion impressions. The Martha Stewart holiday campaign also boosted visibility, while loyalty program membership grew 4% in the fourth quarter.
The analysts said operational improvements and robust marketing give the company a significant long-term runway, particularly for Aerie and its OFFLINE brand.
“Momentum has accelerated into Q4, with both brands trending above current guidance,” Jefferies said.
However, challenges remain. Tariff headwinds contributed $20 million in the third quarter and are expected to continue weighing on profitability into 2026. Out-of-stock issues in key women’s categories, especially denim, also posed challenges earlier in the quarter.
Analysts cautioned that macroeconomic uncertainty and ongoing tariff pressures could limit near-term upside despite the recent rally.