March 4 (Reuters) – American Eagle Outfitters forecast annual sales above Wall Street estimates on Wednesday, backed by marketing-driven demand for its apparel and accessories from affluent shoppers.
The company’s marketing efforts and new product launches aimed at attracting younger, Gen Z, higher-earning shoppers have helped it offset the impact of the broader retail slowdown.
Its campaigns include “Give Great Jeans” for the holidays, starring veteran actress Martha Stewart, and the “Great Jeans” ad featuring “Euphoria” actor Sydney Sweeney, which even garnered praise from U.S. President Donald Trump.
The company, which sells products ranging from women’s “Premium Dolman Trench Coats” for $298 to accessories such as socks, flip-flops and earrings priced around $10, beat holiday quarterly revenue helped by strong demand for Aerie, its intimates and athleisure brand.
Fourth-quarter gross margin fell 30 basis points, hurt by a $50 million impact from tariffs.
Rival Abercrombie & Fitch and shoemaker Steve Madden have also flagged pressure from tariffs in 2026 as companies navigate uncertainties around the duties.
American Eagle’s operating income nearly halved in 2025 to $226 million, partly due to an impairment charge of $102 million related to its exit from the e-commerce logistics business Quiet Platforms, which it acquired in 2021, as well as store impairments and corporate restructuring charges.
“AEO’s performance is a useful counterpoint to the cautious consumer narrative we’ve seen from other retailers this week,” said Michael Gunther, senior vice president of research and market intelligence at Consumer Edge.
“The results, commentary, and outlook suggest the young adult apparel consumer is still spending, but increasingly with brands that are earning their attention.”
Holiday-quarter net revenue of $1.76 billion came above the analysts’ average estimate of $1.74 billion, according to data compiled by LSEG.
It posted a quarterly adjusted profit of 84 cents per share, beating estimates of 72 cents per share.
The company expects annual comparable sales to rise in the mid-single-digit percentage range, compared to analysts’ estimates of a 2.92% rise.
American Eagle’s shares, which rose 58% in 2025, were largely unchanged in choppy trading after the bell.
(Reporting by Sanskriti Shekhar and Juveria Tabassum in Bengaluru; Editing by Alan Barona)
