American Eagle Outfitters Q3 revenue up 6%; lifts Q4 outlook

Total net revenue rose 6 per cent year-on-year to $1.36 billion, with comparable sales up 4 per cent. Aerie continued to outperform, posting an 11 per cent rise in comparable sales, while the American Eagle brand delivered a 1 per cent increase.

Gross profit grew 5 per cent to $552 million, although gross margin slipped 40 basis points to 40.5 per cent. The company said tariffs had a $20 million impact, equal to 150 basis points of margin pressure. Higher markdowns were largely offset by stronger sales, cost reductions and favourable freight trends. Buying, occupancy and warehousing expenses leveraged by 20 basis points.

“I’m extremely pleased with the significant trend change across our business reflecting decisive steps taken from merchandising to marketing to operations—all having a positive impact. Record third quarter revenue was highlighted by Aerie’s double-digit comparable sales increase and positive growth at American Eagle, contributing to results that exceeded expectations,” commented Jay Schottenstein, executive chairman of the board and chief executive officer, AEO Inc.

Selling, general and administrative (SG&A) expenses increased 10 per cent to $386 million, reflecting planned advertising investments, though partially offset by broader expense leverage. Operating profit came in at $113 million, up from $106 million a year earlier, or $124 million on an adjusted basis. Operating margin was 8.3 per cent, compared with 8.2 per cent last year; adjusted operating margin stood at 9.6 per cent.

Other income reached $14 million, including a $13 million unrealised gain on a previously disclosed investment. Diluted earnings per share (EPS) climbed 29 per cent to $0.53, while adjusted diluted earnings per share increased 10 per cent. Average diluted shares outstanding were 173 million.

Total ending inventory increased 11 per cent to $891 million, with units up 8 per cent, reflecting higher demand, new store openings and improved in-stock levels. Inventory costs also reflected tariff impacts, the company said in a financial release.

Buoyed by stronger sales momentum, American Eagle raised its fourth-quarter operating income outlook to $155–160 million, based on comparable sales growth of 8–9 per cent and similar growth in total revenue. Previous guidance projected $125–130 million in operating income on low single-digit comparable sales growth.

For the full year, adjusted operating income guidance rises to $303–308 million on low single-digit comparable sales growth, up from $255–265 million on flat sales previously.

“Strong momentum has continued into the fourth quarter, including an excellent start to the holiday season. We delivered a record-breaking Thanksgiving weekend, led by an acceleration in demand across brands and channels and underscored by outstanding growth at Aerie and Offline. We are focused on finishing the season strong and sustaining our success into 2026 and beyond,” Schottenstein concluded.

ALCHEMPro News Desk (HU)