American Eagle Outfitters, Inc.

Second quarter consolidated revenue was $1.4 billion, up 8% year over year, with comparable sales up 6%. Gross profit was $672 million, up 34%, and gross margin was 48.7%, up 980 basis points; gross profit included a net benefit of $179 million from tariff refunds, and operating profit included a net benefit of $161 million from tariff refunds. EPS was $0.79, versus $0.40 last year implied by the operating profit comparison and tax rate context was about 25%. For the quarter, Aerie revenue grew 25% to $536 million and comparable sales rose 19%, while AE total sales rose 1% and comps declined 1%. Looking ahead, Q3 comparable sales are expected to grow in the mid- to high single digits, with Aerie and OFFLINE in the high teens to 20% range and American Eagle approximately flat. Q3 operating income is expected to be $110 million to $115 million, gross margin is expected to be similar to last year, and SG&A is expected to be up in the high single digits. Full-year operating income guidance is $540 million to $550 million on consolidated comparable sales growth in the mid-single digits, with full-year gross margin expected to be up year over year.

Jay Schottenstein framed the quarter as another step forward, emphasizing that Aerie continued to deliver outstanding performance while American Eagle showed progress from the first quarter. He highlighted the strength and relevance of the brands, the company’s focus on stronger profitability, and the importance of the team in executing the turnaround work. His tone was constructive and upbeat, but he was clear that AE still has “work to do.”

Mike Mathias focused on the financial bridge: strong Aerie momentum, tariff refunds, and ongoing investment in the business. He detailed gross profit of $672 million, gross margin of 48.7%, SG&A at 29.6%, operating profit of $211 million, and EPS of $0.79, and noted $66 million of CapEx, $21 million returned to shareholders via dividend, and year-end liquidity of $783 million including the revolver. He also said inventory cost was up 14% with units up 9%, and that the company is rebalancing inventory between brands and categories while maintaining a full-year operating income outlook of $540 million to $550 million.

Analysts focused on two main issues: how far American Eagle’s denim and broader women’s business have improved, and whether Aerie’s strong Q3 trends were sustainable against tougher comparisons. Management said AE’s denim improved sequentially after a pivot to better-fitting styles, but older fits still need to be worked through with inventory rebalancing and markdowns. On Aerie, they said quarter-to-date trends remain strong across channels and categories, and they reiterated that Q3 brand trends are tracking in line with guidance.