American Eagle Outfitters Q2 profit rises 2% despite revenue dip

The total comparable sales declined 1 per cent, with Aerie up 3 per cent and American Eagle down 3 per cent. The gross margin improved 30 basis points (bps) to 38.9 per cent, supported by higher merchandise margins and lower markdowns. SG&A expenses were down 1 per cent to $342 million.

The company completed a $200 million accelerated share repurchase, reducing shares by 18 million in the quarter. Year-to-date repurchases total $231 million, cutting diluted shares by 10 per cent. Dividends paid year-to-date reached $43 million. Inventory stood at $718 million, up 8 per cent, largely reflecting tariff impacts.

“We were pleased to see an improvement in the business during the second quarter driven by higher demand, lower promotions and well-managed expenses, all of which exceeded our expectations,” said Jay Schottenstein, executive chairman of the board and chief executive officer (CEO) at AEO Inc. “The actions we have taken to better align inventory and strengthen execution laid the groundwork for our results this quarter. Highlighted by Aerie’s top-line increase and better sell-throughs overall, we achieved our second highest enterprise revenues ever recorded for the second quarter.”

“The fall season is off to a positive start. Fuelled by stronger product offerings and the success of recent marketing campaigns with Sydney Sweeney and Travis Kelce, we have seen an uptick in customer awareness, engagement and comparable sales. We look forward to building on our progress and the continued strength of our iconic brands to drive higher profitability, long-term growth and shareholder value,” added Schottenstein.

For the third quarter (Q3) of FY25, AEO expects operating income of $95–$100 million and in the fourth quarter (Q4) it is expected to increase to $125–$130 million. For fiscal 2025 (FY25), the company projects adjusted operating income of $255–$265 million, with comparable sales flat and gross margin down YoY. SG&A is forecast to rise, while the effective tax rate is anticipated at about 25 per cent. The company continues to expect 2025 capital expenditures to be approximately $275 million.

ALCHEMPro News Desk (SG)