Revenue Performance
American Eagle Outfitters (AEO) reported $1.28 billion in net revenue for the second quarter ended 2 August 2025, a 1% decline year-over-year. Despite the dip, results beat analyst expectations by more than 4%. Comparable sales also slipped by 1%.
The company’s Aerie brand was a bright spot, with comparable sales rising 3%, offsetting a 3% drop in the American Eagle line.
CEO Jay Schottenstein credited higher demand, fewer promotions, and stronger inventory management for the quarter’s outcome, marking AEO’s second-highest Q2 revenue in its history.
Profitability and Margins
Gross profit rose slightly to $499.96 million, with gross margin expanding to 38.9%, up 30 basis points, driven by lower markdowns.
Selling, general and administrative expenses fell by 1% to $342.21 million, helped by reduced compensation costs, though advertising investments balanced the savings.
Operating profit increased 2% to $103.09 million, with operating margin improving to 8.0%. Net income grew marginally to $77.63 million, while diluted EPS rose 15% to $0.45.
Inventory and Shareholder Returns
Inventory rose 8% to $718 million, largely reflecting tariff-related cost increases, while units increased 3%.
AEO completed a $200 million share repurchase program, reducing outstanding shares by approximately 10% this year. Total buybacks so far in FY25 stand at $231 million. Capital expenditures reached $133 million year-to-date, with full-year guidance unchanged at $275 million.
Outlook
For Q3, AEO projects operating income between $95 million and $100 million, with tariffs expected to cut profits by $20 million. In Q4, the tariff impact could range from $40 million to $50 million.
For the full year, the company expects flat comparable sales, lower gross margin, and adjusted operating income between $255 million and $265 million.
Schottenstein noted that the fall season has started well, citing new product strength and high-profile campaigns with Sydney Sweeney and Travis Kelce as key drivers of customer engagement and sales momentum.