American Eagle Outfitters reported third‑quarter 2025 results that surpassed expectations, with net revenue of $1.36 billion—up 6% year‑over‑year—and adjusted earnings per share of $0.53, beating the consensus estimate of $0.43 by $0.10 or 23%. Gross margin held at 40.5%, a 40‑basis‑point decline from the prior year, largely due to a $20 million tariff impact but partially offset by stronger sales in its core brands.
Revenue growth was driven by a 11% increase in comparable sales at the Aerie brand and a 1% rise at American Eagle, the company’s flagship line. Inventory levels rose 11% to $891 million, reflecting higher demand and new store openings that positioned the company for the holiday season.
Gross margin compression was mainly attributable to the tariff hit, but the company’s cost‑control initiatives and a favorable mix shift toward higher‑margin Aerie merchandise helped mitigate the impact. Operating income for the quarter was $155 million, up from $125 million in the same period a year earlier, and the company raised its full‑year adjusted operating‑income target to $303 million–$308 million from the previous $255 million–$265 million range.
Executive Chairman and CEO Jay Schottenstein said the results “reflect decisive steps taken from merchandising to marketing to operations, all having a positive impact.” He highlighted the record‑breaking Thanksgiving weekend and the acceleration in demand across brands as evidence of the company’s “Powering Profitable Growth” strategy gaining traction.
Investors welcomed the earnings beat and guidance hike, citing the strong performance of the Aerie brand, the company’s ability to manage tariff‑related margin pressure, and the confidence expressed by management in sustaining holiday‑season momentum. The market reaction was driven by the combination of a solid earnings beat, a significant raise in forward guidance, and the continued double‑digit growth of the Aerie brand.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.