American Eagle Outfitters (NYSE: AEO) beat on earnings in the fiscal quarter ended August 2, 2025, as diluted EPS rose 15% to $0.45 from $0.39 in the comparable period last year while revenue slipped 0.6% to $1.28 billion from $1.29 billion last year. The figures beat the estimates $0.20 EPS and $1.23 billion in revenue.
Shares spiked roughly 30% at the open to about $17.70, following the news.
Gross profit edged up 0.2% to $500 million as gross margin improved 30 bps to 38.9% on better merchandise margin. Operating income increased 2% to $103 million, lifting operating margin 20 bps to 8.0%.
Net interest swung from $0.7 million income to $1.9 million expense, and other income was less favorable by around $1.5 million. A lower tax provision helped keep net income essentially flat at $77.6 million from $77.3 million.
Total comparable sales fell 1%, as Aerie rose 3%, offset by a 3% decline at American Eagle. Segment revenue mirrored that mix: Aerie up 3% to $429 million, while American Eagle down 3% to $800 million, and other revenue up 7% to $61.5 million.
Management tied demand to marketing, citing “uptick in customer awareness, engagement and comparable sales” and 700,000 new customers in the quarter, with traffic “consistently positive” through August. The “Sydney Sweeney Has Great Jeans” campaign “is not going anywhere,” the company added.
Cash and equivalents fell 34% YoY to $126.8 million from $191.8 million. Total liabilities rose 36% YoY to $2.52 billion, due to securing a long-term debt as well as a jump in operating lease liabilities.
Despite the stock reaction, management guided conservatively on profitability: Q3 and Q4 comparable sales are expected to be up low single digits, but gross margin is projected down YoY in both periods and for FY 2025 overall. Q3 operating income is guided at $95–$100 million, while Q4 at $125–$130 million. FY 2025 adjusted operating income is guided at $255–$265 million.
Notably, the company flagged tariffs as a continuing inventory cost factor.
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