TLDR
- AEO stock fell around 12% in premarket trading after fiscal Q2 comparable sales missed Wall Street estimates.
- Comparable sales rose 6%, below the 7% analyst forecast; core American Eagle brand same-store sales fell 1%.
- Aerie revenue surged 25% year-over-year, with comparable sales up 19%, but couldn’t offset weakness in the main brand.
- A one-time $196 million federal tariff refund more than doubled operating profit, but management flagged it won’t repeat.
- Full-year operating income guidance was raised to $540M-$550M, up from $390M-$410M, largely due to the tariff windfall.
American Eagle Outfitters (AEO) stock was trading down around 12% in Thursday premarket after the retailer’s fiscal second-quarter results showed comparable sales falling short of what Wall Street had expected.
American Eagle Outfitters, Inc., AEO
The stock closed Wednesday’s regular session at $16.89, already down 1.9% on the day. It has now lost 36% of its value so far this year.
AEO reported earnings of 79 cents per share, well ahead of the 22-cent analyst forecast. Revenue came in at $1.38 billion, edging past the $1.37 billion estimate, and grew 8% from the prior year.
AMERICAN EAGLE $AEO Q2’26 EARNINGS HIGHLIGHTS
🔹 Revenue: $1.38B (Est. $1.37B) 🟢; +8% YoY
🔹 EPS: $0.79 (Est. $0.22) 🟢; +76% YoY
🔹 Total Comparable Sales: +6%
🔹 Gross Margin: 48.7%; +980 bps YoYFY26 Guide:
🔹 Operating Income: $540M-$550M (Est. $398M) 🟢
🔹 Capital… pic.twitter.com/ekkVhGqmdY— Wall St Engine (@wallstengine) September 9, 2026
The miss that stung investors was on comparable sales. Total comps rose 6% for the quarter ended August 1, short of the 6.7% analysts had penciled in.
The core American Eagle brand was the problem spot. Same-store sales for that label declined 1%, while the broader brand has struggled with inconsistent demand, particularly in women’s denim.
Aerie Carries the Load
Aerie, the intimates and activewear label, was the clear bright spot. Revenue grew 25% year-over-year and comparable sales jumped 19%. CEO Jay Schottenstein pointed to four straight quarters of growth in men’s as a positive, while acknowledging the need for “greater consistency in the women’s business.”
Despite the Aerie strength, merchandise margins fell 3.3 percentage points overall, driven by heavy discounting at the American Eagle brand to move older inventory. A sudden shift in fashion trends toward low-rise jeans left some merchandise sitting on shelves.
Inventory costs climbed 14% in the quarter, including costs tied to incremental tariffs.
The Tariff Refund Factor
A big chunk of the profit beat came from a $196 million federal tariff refund received during the quarter. Operating profit more than doubled, rising to $211 million from $103 million the prior year.
Management was upfront that nearly all of the refund money has now been collected, so this boost is unlikely to show up again in future quarters.
Still, AEO raised its full-year operating income target to $540M-$550M, up from the previous range of $390M-$410M. Third-quarter guidance was also lifted.
American Eagle’s forward price-to-earnings multiple sits at 9.38, compared to Abercrombie’s 11.47. Rivals Abercrombie and Gap both raised their full-year forecasts last month.
Analyst Patrick Ricciardi of Third Bridge noted that American Eagle has a “less-clear brand voice and merchandising strategy,” placing it behind the likes of Levi’s and Abercrombie in the denim category.
The company’s annual comparable sales forecast was left unchanged despite the Q2 beat on revenue.
Gross margins for Q3 are expected to be flat, a signal that discounting will continue as the brand works through excess inventory.
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