American Eagle has raised its full-year forecast and is projecting a strong holiday season following a successful quarterly performance. In its latest earnings report, the apparel retailer indicated fiscal fourth-quarter comparable sales are expected to grow between 8% and 9%, significantly exceeding the 2.1% growth anticipated by analysts.
The company now expects adjusted operating income for the full year to range from $303 million to $308 million, an increase from the previous estimate of $255 million to $265 million. Following this announcement, American Eagle’s shares surged by as much as 15% in after-hours trading.
During the third quarter, American Eagle reported earnings of 53 cents per share, surpassing the 44 cents forecast by analysts, while revenue reached $1.36 billion, beating the expected $1.32 billion. This marked an increase in net income to $91.34 million, up from $80.02 million a year prior, with sales rising about 6% compared to $1.29 billion the previous year.
This quarter was significant as it showcased the full impact of American Eagle’s recent marketing campaigns featuring celebrities like Sydney Sweeney and Travis Kelce. While the overall company saw a 4% growth in comparable sales, Aerie, the intimates brand, stood out with an 11% increase in comparable sales and a 13% revenue jump. However, at American Eagle, where the high-profile campaigns were concentrated, comparable sales grew only 1%, falling short of the 2.1% anticipated by analysts.
Despite not showing immediate results in revenue, American Eagle maintains that its marketing efforts are drawing more customers and increasing brand visibility. The operating margin also surpassed expectations at 8.3%, compared to the anticipated 7.5%.
Beyond marketing efforts, American Eagle reported record revenue for the third quarter and noted that strong sales momentum persisted into the current quarter, with a “record-breaking Thanksgiving weekend.” This optimistic holiday forecast contrasts with results from competitors such as Abercrombie & Fitch, Gap, and Urban Outfitters, which also reported better-than-expected performance leading into the holiday shopping period.
Investors are closely monitoring the discretionary retail sector for signs of declining consumer demand amid rising tariffs, but many companies have demonstrated resilience. The industry has shown that consumers are willing to spend, provided they feel they are receiving good value for their purchases. While consulting firms have issued cautious holiday outlooks, the recent earnings reports from retailers suggest positive trends for holiday sales. Additionally, turnout during the “Turkey 5” shopping weekend, the five-day span between Thanksgiving and Cyber Monday, surpassed expectations, according to the National Retail Federation.
