American Eagle Outfitters Inc. (NYSE:AEO) is riding a massive wave of success from celebrity marketing campaigns featuring actress Sydney Sweeney and NFL star Travis Kelce, which attracted over 700,000 new customers in the second quarter.
However, the company is tempering its outlook as it prepares for an estimated $70 million impact from tariffs in the second half of the year, it announced in its second quarter earnings call on Wednesday.
Check out AEO’s stock price over here.
Sydney Sweeney And Travis Kelce Collabs Boost Sales
The high-profile collaborations have been an unqualified success, generating what executives called a “staggering 40 billion impressions” and creating a significant sales lift.
The campaigns fueled positive store traffic in August and led to a record-breaking Labor Day weekend.
Certain items, like a signature pair of jeans worn by Sweeney, sold out within a week. "Sydney Sweeney sells great jeans. She is a winner,” said American Eagle’s Chief Marketing Officer, Craig Brahmers. “In just six weeks, the campaign has generated unprecedented new customer acquisition."
Tariffs Headwinds Still Cloud AEO’s Outlook
Despite this momentum, AEO faces significant financial headwinds. Chief Financial Officer Michael Mathias outlined a projected tariff impact of approximately $20 million in the third quarter and another $40 million to $50 million in the fourth quarter.
He revealed the company’s supply chain adjustments and vendor negotiations have been critical, successfully reducing the potential financial damage from a much larger figure.
"Our unmitigated number was closer to $180 million, compared to the $70 million we are guiding to," Mathias stated, highlighting the company's proactive cost-management strategy.
See Also: American Eagle Stock Soars On Better-Than-Expected Q2 Results, ‘Positive Start’ To Fall Season
American Eagle Outfitters Q2 Earnings Snapshot
The second-quarter revenue of $1.28 billion beat analyst estimates of $1.24 billion. Its earnings of 45 cents per share beat estimates of 20 cents per share.
American Eagle said it expects comparable sales growth in the low single-digit range for both the third and fourth quarters. Looking ahead, AEO is strategically rebalancing its physical retail footprint, planning to close 35 to 40 American Eagle locations by year-end while continuing to open new stores for its high-growth Aerie brand.
Price Action
The stock rose 0.81% on Wednesday and surged 24.74% in after-hours trading. It has fallen 20.49% year-to-date and 32.47% over a year.
Benzinga’s Edge Stock Rankings indicate that AEO maintains a stronger price trend in the short and medium terms but a weak trend in the long term. However, the stock scores well on growth rankings. Additional performance details are available here.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Wednesday. The SPY was up 0.54% at $643.74, while the QQQ advanced 0.79% to $570.07, according to Benzinga Pro data.
On Thursday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were trading in a mixed manner.
Read Next:
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: tinseltown/shutterstock
