American Eagle Outfitters, Inc.

First-quarter consolidated revenue was $1.2 billion, up 10% year over year, with comparable sales up 8%. Gross profit was $456 million, up 41%, and gross margin was 38.2%, up 860 basis points. Operating income was $28 million, and EPS was $0.14; the tax rate was approximately 17%. Aerie total sales grew 34% with comparable sales up 25%, while American Eagle revenue was down 2% and digital was flat; the AE comp decline was driven by stores. For Q2, the company expects comparable sales growth in the mid- to high-single digits, with Aerie and Offline in the high-teens to low-20s and American Eagle in the flat to negative low-single-digit range. Q2 operating income is expected to be $45 million to $50 million, including a $20 million incremental tariff headwind, and SG&A is expected to be up in the mid-teens. Full-year operating profit is guided to $390 million to $410 million on mid-single-digit comp growth, with CapEx of $250 million to $260 million.

Jay Schottenstein said the quarter showed the strength of the portfolio, especially Aerie, and said the team has been working urgently to improve execution at American Eagle. He emphasized that the company is focused on disciplined, flexible operations, continued brand investment, and using the Phoenix distribution center and other levers to support long-term growth. His tone was constructive and upbeat, repeatedly saying the brand is resilient, the economy is strong, and he expects the business to shine in the third and fourth quarters.

Mike Mathias highlighted that gross margin expanded sharply to 38.2% and gross profit rose to $456 million, helped by last year’s inventory write-down and leverage in buying, occupancy and warehousing costs. He said Q2 gross margin will face a 150 to 200 basis point tariff impact, plus some AE markdown pressure to clean inventory into back-to-school, partially offset by expense leverage. He also noted Q1 ending inventory at cost was up 27% with units up 5%, CapEx was $61 million, and the company returned $74 million to shareholders via a $21 million dividend and $53 million in buybacks; cash ended at $103 million with about $620 million of total liquidity. On tariffs, he said the company has applied for roughly $190 million in refunds and expects a $140 million net cash benefit, but none of that is included in guidance yet.

Analysts focused on the weakness in AE women’s bottoms, asking whether the company could fix the issue in time for back-to-school and what styles were being prioritized. Management said the problem is concentrated in women’s bottoms, that they have already tested what rises and fits work, and that more distortion into winning silhouettes and fresher newness will be pushed for back-to-school. Questions also centered on Aerie growth, customer acquisition, and gross margin/tariff pressure; management said Aerie has about 1 million more new customers, retention is strong, and Q2 margins will absorb tariffs and some markdowns while back-half margin should improve as tariffs and ad spending are lapped. The company also clarified tariff claims: roughly $190 million filed, over $100 million already recovered, and about $140 million expected in total net cash if fully refunded.