American Eagle’s third quarter was marked by a positive market reaction, as revenue and profit both exceeded Wall Street expectations. Management attributed the acceleration to strong demand across the Aerie and Offline brands, as well as effective merchandising and marketing initiatives. CEO Jay Schottenstein highlighted that recent investments in advertising, particularly high-profile campaigns and collaborations, have led to higher customer engagement and an increase in loyalty program membership. The company also noted operational improvements and cost discipline as key contributors to the quarter’s results, even as tariffs created headwinds for margins.
Is now the time to buy AEO? Find out in our full research report (it’s free for active Edge members).
American Eagle (AEO) Q3 CY2025 Highlights:
- Revenue: $1.36 billion vs analyst estimates of $1.32 billion (5.7% year-on-year growth, 3.1% beat)
- Adjusted EPS: $0.53 vs analyst estimates of $0.44 (21.6% beat)
- Adjusted EBITDA: $165.5 million vs analyst estimates of $154.1 million (12.1% margin, 7.4% beat)
- Operating Margin: 8.3%, in line with the same quarter last year
- Locations: 1,190 at quarter end, up from 1,186 in the same quarter last year
- Same-Store Sales rose 4% year on year (3% in the same quarter last year)
- Market Capitalization: $3.80 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From American Eagle’s Q3 Earnings Call
- Jay Sole (UBS) asked about the drivers behind the fourth quarter’s sales acceleration and the durability of denim trends. President Jen Foyle pointed to rapid shifts in denim silhouettes and strong execution, while CFO Mike Mathias noted both brands were trending above guidance through Thanksgiving.
- Matthew Boss (JPMorgan) inquired about Aerie’s comp growth drivers and customer acquisition. Foyle cited a new focus on sleepwear, activewear, and influencer campaigns, adding that customer acquisition accelerated into the start of Q4.
- Paul Lejuez (Citi) questioned why high-profile marketing campaigns benefited Aerie more than AE. Foyle and Schottenstein explained that inventory constraints in women’s denim at AE limited immediate gains, but positive results emerged as stock improved.
- Alexandra Straton (Morgan Stanley) wanted clarity on marketing spend as a percentage of sales and future plans. Mathias said the company is resetting its advertising baseline to 5% of sales, with ongoing evaluation based on results.
- Chris Nardone (Bank of America) asked about store fleet plans and the source of Aerie’s recent gains. Mathias stated AE store closures are slowing, and Aerie’s growth is coming from both new categories and digital channel expansion.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will focus on (1) the pace of new customer acquisition and retention, especially at Aerie and Offline, (2) the ability to manage tariff-related margin pressures through operational efficiencies and selective pricing, and (3) the impact of ongoing marketing investments on digital and brick-and-mortar traffic. Progress on store remodels and the rollout of new product categories will also be important markers of execution.
American Eagle currently trades at $22.49, up from $20.92 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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