American Eagle falls 15% on dismal forecast – Business News
Shares of American Eagle fell 15% Thursday after the teenager retailer revealed a dismal forecast for the present quarter, regardless of its high-profile denims marketing campaign with Sydney Sweeney.
After the closing bell Wednesday, the retail chain reported upbeat income of $1.4 billion within the second quarter, however it stored its annual same-store gross sales forecast unchanged and forecast flat gross margins for the third quarter.
It’s a signal American Eagle is anticipating reductions on its extra denim stock to hit income, in addition to smooth gross sales in its namesake model.
Sydney Sweeney (above) launched a denims marketing campaign with American Eagle final 12 months. American Eagle
Most of the company’s growth has come from its intimates and loungewear model, Aerie, and its activewear offshoot, Offline.
Earlier this 12 months, American Eagle renewed its tie-up with Sweeney, recognized for her roles in “Euphoria” and “White Lotus,” for a denim shorts marketing campaign, hopeful it may juice gross sales as soon as again.
American Eagle’s initial racy denims marketing campaign with Sweeney in 2025 marked a departure from previous forays into tame “body-positive” adverts.
The new promos garnered the eye of President Trump and helped drive gross sales, bringing in nearly a million new clients – whilst unhinged online critics baselessly accused the industrial of selling Nazi-style eugenics.
Jay Schottenstein, the company’s chief government, resisted online stress to tug the provocative advert marketing campaign as the gathering flew off the cabinets – with the “Sydney Jean” promoting out in a week.
The Sweeney marketing campaign was American Eagle’s attempt to win over Gen Z customers – however the company has continued to fall behind rivals like Abercrombie & Fitch and Gap, each of which just lately raised their annual revenue forecasts.
Raymond James analyst Rick Patel stated regular demand at Aerie isn’t enough to offset weak point at American Eagle, particularly as clients stray away from the chain’s signature denims.
American Eagle executives stated Wednesday that they’ve been struggling to filter out older stock, particularly after low-rise denim denims instantly grew to become fashionable.
The company’s stock prices rose 14% within the second quarter.
The company forecast flat gross margins for the third quarter. REUTERS
“AEO remains a tale of two brands, with Aerie remaining red-hot, but the larger American Eagle brand is still a bit of a mixed bag,” Needham analyst Tom Nikic stated in a observe.
He predicted the company will face an even more durable retail climate within the second half of the 12 months resulting from a “volatile macro environment.”
Demand throughout the broader retail sector has been uneven as inflation-battered clients cut back on non-necessities.
Shares of American Eagle are down 45% thus far this 12 months.
American Eagle stated it’s having issue promoting extra denim stock. Getty Images
Even earlier than the controversial Sweeney marketing campaign, American Eagle had began shifting its model to more provocative seems to be in an attempt to win back clients, as The Post beforehand reported.
A decade in the past, its Aerie model had surpassed longtime lingerie queen Victoria’s Secret as millennial customers favored its adverts displaying numerous physique varieties and atypical ladies – however that momentum slowed.
The company was “almost paralyzed by their body positivity movement” and scared about coming throughout as “too sexy,” in response to retail analyst Gabriella Santaniello, who heads up A-Line Partners.
After Trump’s re-election win, American Eagle began including string bikinis and “cheeky bottoms” to its shops – objects that had been beforehand solely obtainable online. It additionally adopted “edgier” seems to be for its fashions, with more fitted cropped camisoles as an alternative of boxy T-shirts.
