Track market-moving stories before they get noisy

In the latest trading session, American Eagle Outfitters (AEO - Free Report) closed at $17.36, marking a -1.03% move from the previous day. The stock's performance was behind the S&P 500's daily gain of 0.89%. Meanwhile, the Dow gained 0.74%, and the Nasdaq, a tech-heavy index, added 1.29%.

Prior to today's trading, shares of the teen clothing retailer had lost 1.41% lagged the Retail-Wholesale sector's gain of 1.33% and the S&P 500's loss of 0.63%.

Market participants will be closely following the financial results of American Eagle Outfitters in its upcoming release. The company's upcoming EPS is projected at $0.21, signifying a 53.33% drop compared to the same quarter of the previous year. Simultaneously, our latest consensus estimate expects the revenue to be $1.37 billion, showing a 6.45% escalation compared to the year-ago quarter.

For the annual period, the Zacks Consensus Estimates anticipate earnings of $1.76 per share and a revenue of $5.81 billion, signifying shifts of +17.33% and +5.66%, respectively, from the last year.

Investors might also notice recent changes to analyst estimates for American Eagle Outfitters. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-term stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.39% lower within the past month. American Eagle Outfitters is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that American Eagle Outfitters has a Forward P/E ratio of 9.96 right now. This signifies a discount in comparison to the average Forward P/E of 16.53 for its industry.

Meanwhile, AEO's PEG ratio is currently 3.83. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. As the market closed yesterday, the Retail - Apparel and Shoes industry was having an average PEG ratio of 1.23.

The Retail - Apparel and Shoes industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 62, which puts it in the top 26% of all 250+ industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

American Eagle Outfitters (AEO - Free Report) closed the most recent trading day at $17.03, moving -2.63% from the previous trading session. The stock fell short of the S&P 500, which registered a loss of 1.01% for the day. At the same time, the Dow lost 0.77%, and the tech-heavy Nasdaq lost 1.4%.

Shares of the teen clothing retailer have depreciated by 1.8% over the course of the past month, underperforming the Retail-Wholesale sector's gain of 0.78%, and the S&P 500's gain of 0.32%.

The upcoming earnings release of American Eagle Outfitters will be of great interest to investors. The company is expected to report EPS of $0.21, down 53.33% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.37 billion, up 6.45% from the year-ago period.

For the full year, the Zacks Consensus Estimates project earnings of $1.76 per share and a revenue of $5.81 billion, demonstrating changes of +17.33% and +5.66%, respectively, from the preceding year.

It's also important for investors to be aware of any recent modifications to analyst estimates for American Eagle Outfitters. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.39% lower. American Eagle Outfitters currently has a Zacks Rank of #3 (Hold).

Investors should also note American Eagle Outfitters's current valuation metrics, including its Forward P/E ratio of 9.93. This indicates a discount in contrast to its industry's Forward P/E of 16.59.

We can additionally observe that AEO currently boasts a PEG ratio of 3.82. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. As the market closed yesterday, the Retail - Apparel and Shoes industry was having an average PEG ratio of 1.27.

The Retail - Apparel and Shoes industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 69, which puts it in the top 29% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.

AEO trades at a discounted valuation, but investors are weighing tariff and cost pressures against its long-term growth initiatives.

American Eagle Outfitters (AEO - Free Report) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.

Shares of this teen clothing retailer have returned +0.1% over the past month versus the Zacks S&P 500 composite's -0.9% change. The Zacks Retail - Apparel and Shoes industry, to which American Eagle belongs, has lost 1% over this period. Now the key question is: Where could the stock be headed in the near term?

Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.

Revisions to Earnings EstimatesHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.

Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.

For the current quarter, American Eagle is expected to post earnings of $0.21 per share, indicating a change of -53.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -6.3% over the last 30 days.

The consensus earnings estimate of $1.77 for the current fiscal year indicates a year-over-year change of +18%. This estimate has changed +0.6% over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $1.9 indicates a change of +7.5% from what American Eagle is expected to report a year ago. Over the past month, the estimate has remained unchanged.

With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for American Eagle.

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Projected Revenue GrowthEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.

In the case of American Eagle, the consensus sales estimate of $1.37 billion for the current quarter points to a year-over-year change of +6.4%. The $5.81 billion and $6 billion estimates for the current and next fiscal years indicate changes of +5.6% and +3.4%, respectively.

Last Reported Results and Surprise HistoryAmerican Eagle reported revenues of $1.2 billion in the last reported quarter, representing a year-over-year change of +9.7%. EPS of $0.14 for the same period compares with -$0.29 a year ago.

Compared to the Zacks Consensus Estimate of $1.18 billion, the reported revenues represent a surprise of +0.94%. The EPS surprise was +27.27%.

The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.

ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.

While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.

The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an A is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

American Eagle is graded A on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about American Eagle. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.

PITTSBURGH--(BUSINESS WIRE)--American Eagle Outfitters, Inc. (NYSE: AEO) today announced that after 25 years of service, Mike Mathias, Executive Vice President - Chief Financial Officer will transition to serve as a full-time non-executive strategic advisor to Jay Schottenstein, Executive Chairman of the Board and Chief Executive Officer, effective August 3, 2026.

Ravi Thanawala will succeed Mathias as Executive Vice President - Chief Financial Officer, also effective August 3, 2026. To ensure a seamless leadership transition, Mathias will collaborate closely with Thanawala through the remainder of AEO’s 2026 fiscal year and continue supporting Schottenstein through July 30, 2027.

“I want to extend my immense appreciation to Mike for his exceptional leadership and dedicated service. Mike’s history with AEO runs incredibly deep. He began his career with the company in 1998, and though his professional journey took him elsewhere for a time, his love for AEO’s brands and people ultimately brought him back in 2017, where his significant impact led to his promotion to CFO in 2020. Throughout his tenure, he has successfully guided our organization through a rapidly evolving retail landscape and a period of significant growth, which is why I’ve asked Mike to step into the role of strategic advisor to me. Mike’s financial expertise and strategic foresight have been instrumental in strengthening the foundation of our business, driving long-term value and positioning AEO for a bright future,” said Jay Schottenstein.

Schottenstein continued, “We are pleased to welcome Ravi Thanawala to the executive team. His extensive retail background, dynamic leadership style and proven track record of delivering operational excellence for consumer-facing brands will position us well for long-term success.”

"I am incredibly proud of the financial and operational milestones we have achieved during my time as CFO,” said Mike Mathias. “I want to thank Jay, the Board of Directors and my colleagues for their partnership and extend my appreciation to our exceptional finance team for their dedication and resilience. I leave the finance function in highly capable hands, backed by the deep bench strength of our talented leaders–and I have full confidence in AEO’s continued momentum in the marketplace as I support a smooth transition.”

Incoming Executive Vice President - Chief Financial Officer, Ravi Thanawala said, “American Eagle Outfitters, Inc. has been a premier specialty retailer for generations with longstanding market leadership, and I am honored to step into the role as CFO. I have long admired AEO's powerful portfolio of beloved lifestyle brands, including American Eagle and Aerie, as well as the disciplined financial foundation and strong operational framework that Jay, Mike and the team have established. My immediate priority is working with Mike to ensure a seamless transition that maintains organizational momentum. Looking ahead, I am excited to partner with Jay and leadership to accelerate long-term strategic initiatives, maintain financial discipline and unlock new avenues for profitable growth that will help to maximize value for our shareholders.”

In addition, AEO today reaffirmed its second quarter and full-year 2026 financial guidance, as previously announced in its earnings release on May 28, 2026.

About Ravi Thanawala

Ravi Thanawala was appointed the Chief Financial Officer and President, North America of Papa John’s International, Inc. in November 2025 after serving as Chief Financial Officer and EVP, International since September 2024. Thanawala also served as Papa John’s Interim Chief Executive Officer from March 2024 to August 2024, after joining the company as Chief Financial Officer in July 2023. He previously held the role of Chief Financial Officer of Nike North America at Nike, Inc. from June 2020 to July 2023. From 2018 to 2020, Thanawala also served as the Global VP and CFO of the Converse brand. In addition, he was the Global VP of Retail Excellence from 2016 to 2018. Prior to Nike, Inc., Thanawala spent eight years at ANN INC. with progressively increasing responsibilities in finance and operations. He served in the finance leadership role for LOFT; led ANN INC’s Asia operations, global logistics and international trade based in Hong Kong; and rose to the position of CFO of the ANN INC. business, a subsidiary of Ascena Retail Group, Inc.

About American Eagle Outfitters, Inc.

American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global specialty retailer with a portfolio of beloved apparel brands including American Eagle, Aerie, OFFL/NE by Aerie, Todd Snyder and Unsubscribed. Rooted in optimism, inclusivity and authenticity, AEO’s brands empower every customer to celebrate their unique personal style by offering casual, comfortable, timeless outfitting and high-quality products that are made to last.

AEO Inc. operates stores in the United States, Canada and Mexico, with merchandise available in more than 30 countries through a global network of license partners. Additionally, the company operates a robust e-commerce business across its brands. For more information, visit aeo-inc.com.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This release and related statements by management contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), which represent management’s expectations or beliefs concerning future events, including, without limitation, expected results for the second quarter and full-year fiscal 2026. Words such as “outlook,” "estimate," "project," "plan," "believe," "expect," "anticipate," "intend," “may,” “potential,” and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. All forward-looking statements made by the company are inherently uncertain because they are based on assumptions and expectations concerning future events and are subject to change based on many important factors, some of which may be beyond the company’s control. Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise and even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. The following factors, in addition to the risks disclosed in Item 1A., Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended January 31, 2026 and in any other filings that we may make with the Securities and Exchange Commission, in some cases have affected, and in the future could affect, the company's financial performance and could cause actual results to differ materially from those expressed or implied in any of the forward-looking statements included in this release or otherwise made by management: the risk that the company’s operating, financial and capital plans may not be achieved; our inability to anticipate fluctuations in customer demand and respond to changing consumer preferences and fashion trends and to manage our inventory commensurately; the seasonality of our business; our inability to achieve planned store financial performance and gain market share in the face of declining shopping center traffic or attract customers to our stores; our inability to react to raw material cost, labor and energy cost increases; our inability to respond to changes in e-commerce and leverage omni-channel capabilities; our inability to execute on our key business priorities; our inability to expand internationally; difficulty with our international merchandise sourcing strategies; the impact that foreign trade issues, including import tariffs and other trade restrictions imposed by the U.S., China or other countries have had, and may continue to have, on our product costs, as well as continued uncertainty with respect to tariffs and other trade restrictions, the possibility that product costs may be affected by other foreign trade issues, such as currency exchange rate fluctuations, increasing prices for raw materials, supply chain issues, the potential for a trade war, political instability or other reasons; challenges with information technology systems, including safeguarding against security breaches; changes to U.S. or other countries' trade policies and tariff and import/export regulations, and global economic, public health, social, political and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits, which could have a material adverse effect on our business, results of operations and liquidity.

The use of the “company,” “AEO,” “we,” "us," and “our” in this release refers to American Eagle Outfitters, Inc.

More News From American Eagle Outfitters, Inc.

Investors face a choice between the high-energy fashion world and the steady demand for home maintenance. Deciding between American Eagle Outfitters (AEO +4.34%) and Pool (POOL +5.40%) involves weighing apparel trends against outdoor leisure cycles.

American Eagle Outfitters is a specialty apparel giant focused on youth brands, while Pool serves as a vital wholesale link in the global swimming pool market. Both companies cater to discretionary spending, but their business models and growth drivers differ significantly. This comparison evaluates their financials and risks to see which stock is a better fit for 2026.

American Eagle Outfitters operates as a specialty retailer offering apparel, accessories, and personal care products through its American Eagle and Aerie brands. The company manages over 1,100 stores across North America and Asia while reaching dozens of other countries through licensing and digital channels. Among retail stocks, its recent move to close the Quiet Platforms business signifies a strategic shift back to its core brand strengths.

In fiscal 2025 (which ends in January), the company generated revenue exceeding $5.5 billion, up about 4% over the previous year. It’s turning a profit, with net income of $185 million, though the net margin decreased to roughly 3.5% from 6.2% in the prior year. This trend suggests that while sales are expanding, higher costs or pricing pressures may be impacting the bottom line.

According to its January 2026 balance sheet, the debt-to-equity ratio is approximately 0.8x. This metric compares a company's total debt to its shareholder equity to help investors understand its financial leverage. The company maintained a current ratio of roughly 1.5x, which measures its ability to cover short-term liabilities, and generated free cash flow of nearly $195 million during the year.

The case for PoolPool is the world’s largest wholesale distributor of swimming pool supplies and outdoor living products. With approximately 455 locations globally, the company serves a professional customer base, including pool builders, remodelers, and independent retail specialty stores. This business model relies on both the initial construction of new pools and the recurring maintenance needs of existing pool owners.

For 2025, the company reported revenue of nearly $5.3 billion, a slight decrease of roughly 0.4% from the prior fiscal year. Net income was $406 million, resulting in a net margin of close to 7.7%. While revenue growth was flat, the company has maintained a higher net margin compared to many other distributors in the consumer space.

As of the December 2025 balance sheet, the debt-to-equity ratio is roughly 1.2x. The current ratio is approximately 2.2x, indicating a strong capacity to pay off short-term debts with its current assets. Free cash flow was $309 million, providing the company with capital to continue its acquisition and dividend payment strategies.

Risk profile comparisonAmerican Eagle Outfitters faces significant macroeconomic risks, as inflation and interest rate volatility can quickly dampen discretionary consumer spending. The company is also vulnerable to supply chain disruptions and trade policy changes, particularly following the February 2026 court rulings on tariffs. Furthermore, it must compete with e-commerce players and numerous apparel brands, which places constant pressure on pricing and digital innovation.

Pools are highly dependent on the housing market and the general state of the economy, as new pool construction is a major ticket expense for homeowners. While maintenance provides a recurring revenue stream, prolonged recessions can lead consumers to defer luxury upgrades or repairs. The company also faces competition from regional distributors and specialty retailers, which can affect its market share and pricing power in key geographic regions.

Valuation comparisonAmerican Eagle Outfitters shares are less expensive based on earnings and sales than those of its industry peers. Yet Pool is also trading at a discounted forward earnings multiple relative to its competitors. Both stocks could be undervalued right now.

MetricAmerican Eagle OutfittersPoolSector BenchmarkForward P/E10.1x18.0x28.6xP/S ratio0.5x1.4xn/aSector benchmark uses the SPDR XLY sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?It hasn’t been a strong macroeconomic environment for either business. Despite a weak sales backdrop, American Eagle has posted sales growth for three consecutive years, a testament to a well-managed apparel business. On the other side, Pool has experienced inconsistent top-line performance.

However, investors shouldn’t be persuaded by recent results. Pool has better long-term growth prospects once the housing market recovers. American Eagle faces intense competition from numerous apparel brands, but Pool has a more durable moat due to its scale and highly efficient distribution network.

As the leader in outdoor products, Pool is a solid business. New home construction provides the company with a steadily expanding addressable market. However, Pool is not only reliant on selling new pool units. It can also generate revenues through maintenance and remodeling projects.

When the housing market recovers, Pool stock could rebound sharply, as it is trading at 66% below its previous highs. The combination of industry leadership and expansion potential from housing market growth makes Pool a better long-term growth stock to hold.

The Zacks Style Scores offers investors a way to easily find top-rated stocks based on their investing style. Here's why you should take advantage.

Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.

Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.

Zacks Premium includes access to the Zacks Style Scores as well.

What are the Zacks Style Scores? The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value ScoreValue investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.

Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.

Momentum ScoreMomentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.

VGM ScoreIf you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.

It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +24% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.

That's where the Style Scores come in.

To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: American Eagle Outfitters (AEO - Free Report) Based in Pittsburgh, PA, American Eagle Outfitters Inc. is a specialty retailer of casual apparel, accessories and footwear for men and women aged 15–25 years. American Eagle, along with its subsidiaries, engages in the designing and marketing of casual clothing. The company’s assortment includes jeans, cargo pants, graphic T-shirts as well as a range of accessories, outerwear and footwear.

AEO is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.

Momentum investors should take note of this Retail-Wholesale stock. AEO has a Momentum Style Score of B, and shares are up 14.2% over the past four weeks.

For fiscal 2027, four analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.01 to $1.77 per share. AEO boasts an average earnings surprise of +48.5%.

With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, AEO should be on investors' short list.

Key Takeaways Aerie is driving AEO's growth, with Q1 revenues up 34% and comparable sales up 25%.AE brand revenues and comps fell 2% Q1, pressured by women's bottoms and denim.AEO faces tariff headwinds, planned markdowns and higher advertising spend as it works to stabilize AE. American Eagle Outfitters, Inc. (AEO - Free Report) is running two stories at once. Aerie and OFFLINE are expanding quickly, while the core American Eagle brand is still working through uneven demand.

That mix keeps the stock in focus. Management still expects mid-single-digit comparable sales growth for fiscal 2026 and operating income of $390-$410 million, but execution has to improve.

AEO’s Business Mix Is ChangingAmerican Eagle operates through the AE brand, Aerie by American Eagle and AEO Direct, its online retailing channel. AE sells casual apparel and accessories to younger men and women, while Aerie focuses on lifestyle apparel across stores and aerie.com.

The story is no longer just a mall-apparel narrative. Aerie has become the faster-growing brand, supported by broader categories and digital reach, while AEO Direct gives both brands an e-commerce platform that can deepen customer engagement.

American Eagle Sees Better 2026 ExecutionAEO is investing in digital capabilities, marketing, store remodels and distribution to build a more agile operating base. The West Coast distribution center in Phoenix went live in early May 2026, adding capacity to improve inventory placement and customer service.

Cost control is part of the same plan. The company is winding down third-party fulfillment operations and managing delivery and distribution expenses, which helped buying, occupancy and warehousing costs leverage 150 basis points in the first quarter.

Aerie Gives AEO Its Strongest CatalystAerie remains AEO’s clearest growth driver. First-quarter fiscal 2026 revenues rose 34% year over year to $480.8 million, while comparable sales increased 25%. The brand also surpassed $2 billion in trailing 12-month revenues.

OFFLINE, sleepwear, intimates and apparel innovation are expanding the runway. Aerie apparel comps rose 45% in the quarter, intimates delivered high-single-digit comps and the undies business reached record performance, giving this Zacks Rank #3 (Hold) company a meaningful offset to AE brand softness.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Image Source: Zacks Investment Research

American Eagle Still Has Real FrictionThe weak spots are visible. AE brand revenues and comps declined 2% in the first quarter, with the main pressure concentrated in women’s bottoms, including denim. Seasonal categories also faced pressure from a colder spring.

Margins and expenses add another layer of risk. The second-quarter outlook includes a $20 million incremental tariff headwind, tariff-related gross margin pressure of 150-200 basis points, planned AE markdowns before back-to-school and mid-teens SG&A growth tied mainly to advertising.

How AEO’s Signals Fit the StoryAEO looks more balanced than cleanly momentum-driven. Aerie’s acceleration, OFFLINE’s runway and planned operating leverage support the bull case, but AE’s women’s business, tariffs, markdowns and higher advertising spend keep the setup from being straightforward.

Abercrombie & Fitch Co. (ANF - Free Report) offers a relevant comparison as a global omnichannel specialty retailer with youth-oriented apparel brands. Urban Outfitters, Inc. (URBN - Free Report) is another useful reference point because it operates a portfolio that includes Urban Outfitters, Anthropologie, Free People, FP Movement and Nuuly.

For AEO, the bottom line is that investors are weighing a real growth engine against real execution risk. The stock’s outlook depends less on a single quarter of Aerie strength and more on whether AE can stabilize as distribution, marketing and inventory initiatives mature.

The Zacks Rank and Zacks Style Scores should be treated as confirmation tools around that operating view. The Zacks Rank is the primary near-term earnings-estimate revision signal, while the Value Score, Growth Score, Momentum Score and VGM Score help frame valuation, growth quality and price-trend characteristics. In general, Zacks Rank #1 and Zacks Rank #2 (Buy) stocks with Style Scores of A or B offer stronger combinations, while weaker ranks call for caution even when one style reading looks favorable.

Key Takeaways AEO is navigating a fiscal 2026 shift as Aerie growth offsets tariff pressure and uneven AE demand.Aerie revenues jumped 34% in Q1, with OFFLINE, sleepwear, intimates and undies fueling demand.Tariffs, markdowns and higher ad spend leave AEO with visible execution risk amid supply-chain changes. American Eagle Outfitters, Inc. (AEO - Free Report) is showing several specialty apparel trends at once. The company is leaning into brand-led growth at Aerie while working through tariff pressure, higher advertising costs and uneven demand at the American Eagle brand.

The result is a transition story. AEO’s fiscal 2026 outlook depends on stronger execution, sharper inventory flow and whether Aerie can keep offsetting friction elsewhere in the portfolio.

Aerie Shows Where AEO Demand Is MovingAerie is the clearest sign of where AEO demand is shifting. The brand’s first-quarter fiscal 2026 revenues rose 34% year over year to $480.8 million, while comparable sales increased 25%. Aerie also surpassed $2 billion in trailing 12-month revenues.

The growth is not tied to one product line. OFFLINE Activewear continues to gain traction through matching sets, new silhouettes, fresh fabrications and curated drops. Sleepwear is scaling as a long-term top-line engine, while intimates delivered high-single-digit comps and the undies business reached a record performance.

This matters because AEO is expanding wallet share through a broader lifestyle assortment, not only through legacy denim demand. Abercrombie & Fitch Co. (ANF - Free Report) and Urban Outfitters, Inc. (URBN - Free Report) both compete in apparel and lifestyle retail, where product newness and brand identity shape demand.

Image Source: Zacks Investment Research

American Eagle Is Reworking Its Supply ChainAEO is changing how product moves through the business. The company is investing in digital capabilities, store remodels and distribution to improve agility and profitability.

The Phoenix West Coast distribution center went live in early May 2026. Management expects the facility to support better inventory placement and customer service, giving shoppers more ways to receive product.

Cost control is part of the same trend. This Zacks Rank #3 (Hold) company is winding down third-party fulfillment operations and managing delivery and distribution costs. Buying, occupancy and warehousing expenses leveraged 150 basis points in the first quarter due to higher sales and cost optimization. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Tariffs Are Resetting AEO Margin MathTariffs remain one of the biggest variables in the fiscal 2026 margin story. AEO’s guidance assumes a tariff rate of 10% on second-quarter receipts and 15% for the back half of fiscal 2026.

That pressure is already visible in inventory. Total ending inventory increased 27% at cost in the first quarter, while units rose only 5%. Management attributed the gap mainly to tariffs and the comparison with last year’s inventory write-down.

The second quarter is expected to carry a 150- to 200-basis-point tariff impact on gross margin. AEO is using sourcing, product, marketing and operational levers to offset the pressure, but tariffs still affect promotional choices and key selling periods. Marketing Spend Is Rising Across AEO.

Advertising is becoming a more important operating lever. SG&A expenses increased 11% in the first quarter, led by planned investments in advertising.

The spending pattern differs by brand. Aerie’s marketing is tied closely to its sales growth and customer engagement. The 100% Aerie REAL campaign supported brand visibility and reinforced its positioning around inclusivity and authenticity.

At American Eagle, marketing is aimed more at customer file growth, consideration and conversion. The AE customer file increased 3% year over year to more than 19 million customers, but store conversion still needs improvement.

What AEO’s Signals Say About the TrendThe bottom line is that AEO is participating in real retail growth themes, but the transition is not complete. Aerie and OFFLINE are expanding demand, while supply-chain work and digital investment are intended to support faster, more efficient execution.

At the same time, American Eagle brand revenues and comparable sales declined 2% in the first quarter, with weakness concentrated in women’s bottoms. Planned markdowns, tariff costs and higher advertising expenses leave the stock with visible execution risk.

That mixed setup fits a neutral posture. The Zacks Rank and Style Scores are useful secondary signals for investors tracking the next phase. A stronger Zacks Rank, supported by favorable Value, Growth, Momentum or VGM Scores, would generally add confirmation, while weaker readings would argue for patience.

For now, AEO looks like a trend story still proving itself. Aerie’s momentum is meaningful, but investors may want evidence that tariff pressure, marketing spend and AE brand fixes can translate into more consistent profit leverage.

The company's revenue rose 10% to $1.20 billion, bolstered by strength at its lingerie brand Aerie.

Abercrombie Rallies as Strong Q1 Earnings Extend Winning StreakAmerican Eagle Outfitters NYSE: AEO reported first-quarter revenue growth and operating income ahead of its guidance, as continued momentum at Aerie and OFFLINE offset weaker trends in parts of the namesake American Eagle brand.

Executive Chairman and Chief Executive Officer Jay Schottenstein said the quarter “reflected the strength of our portfolio, the power of Aerie, and work underway at American Eagle.” The company reported revenue of $1.2 billion, up 10% from last year, with operating income of $28 million. Comparable sales increased 8%.

Get AEO alerts:

5 Retail Stocks That Could Deck the Halls—or Wreck PortfoliosSchottenstein said Aerie surpassed $2 billion in revenue on a trailing 12-month basis, while American Eagle saw strength in men’s and tops but weakness in women’s bottoms, including denim. “We are pleased with performance of the quarter,” Schottenstein said, while adding that the company has “identified specific opportunities to better position women’s bottoms.”

Aerie and OFFLINE Drive Growth Aerie and OFFLINE continued to be the strongest part of the portfolio. Schottenstein said the brands generated revenue of $481 million, up 34% from last year, supported by demand across categories and channels.

MarketBeat Week in Review – 07/28 - 08/01Jennifer Foyle, President and Executive Creative Director for American Eagle and Aerie, said Aerie is “firing on all cylinders,” pointing to broad-based category strength and a 45% comparable sales increase in Aerie apparel. She said Aerie’s head-to-toe merchandising strategy across intimates, sleep and apparel is helping simplify outfitting for customers while increasing basket size and average order value.

Foyle said intimates delivered high single-digit comparable sales growth, led by a record performance in the undies business, and sleep continues to scale as a longer-term growth category. She also highlighted a shift away from brand-wide promotions toward more targeted promotions, always-on pricing in key categories and marketing focused on acquiring and retaining higher-value customers.

The company also cited marketing as a contributor to Aerie’s performance, including the 100% AerieREAL campaign featuring Pamela Anderson. Foyle said the campaign reinforces Aerie’s commitment to inclusivity and authenticity, including a promise not to use AI-generated bodies or people in marketing.

OFFLINE also continued to gain traction. Foyle said the activewear brand is seeing customer response to new silhouettes, styles and fabrications, including matching sets and curated color drops. She said OFFLINE is currently the No. 2 legging brand within the company’s core demographic and is “well on its way to becoming its own activewear brand.”

American Eagle Results Mixed as Women’s Bottoms Weigh The American Eagle brand posted weaker results, with total sales down 2% and comparable sales also down 2%. Chief Financial Officer Mike Mathias said American Eagle’s digital performance was flat, while the comparable sales decline was driven by stores.

Foyle said the American Eagle men’s business delivered its third consecutive quarter of positive growth, with gains across tops and bottoms. Women’s tees and fashion tops also performed well. However, women’s bottoms underperformed expectations and were the primary driver of the brand’s sales decline.

“We know what needs to be corrected, and the teams are aligned and activated to return AE to growth,” Foyle said.

She said the company needs to better distort into specific styles and fits, and that a colder spring hurt demand in seasonal categories. For the back-to-school period, Foyle said the company is refining its bottoms architecture, optimizing key silhouettes and rises, and using chase capabilities to add newness.

During the question-and-answer portion of the call, Foyle said the team has already tested for back-to-school and has identified working rises and fits. She said more recent results in denim have improved, though she did not provide specific figures. Schottenstein said he expects American Eagle to return to positive comparable sales growth in the back half of the year.

Margins Improve, Inventory and Tariffs in Focus Mathias said first-quarter gross profit increased 41% to $456 million, while gross margin expanded 860 basis points to 38.2%. Merchandise margin improved 710 basis points, primarily due to the comparison against last year’s inventory write-down. Buying, occupancy and warehousing expenses leveraged 150 basis points, aided by sales growth and initiatives to control delivery and distribution costs, including benefits from winding down third-party fulfillment operations.

SG&A expenses rose 11%, driven by planned advertising investments. Interest expense increased due to a transaction agreement under which the company sold a portion of its tariff claims, while other income increased due to an unrealized gain on investments. Depreciation was flat at $51 million. The company reported a first-quarter tax rate of approximately 17% and earnings per share of $0.14.

Ending inventory at cost was up 27%, while units were up 5%. Mathias said the difference reflected incremental tariffs this year and the comparison to last year’s inventory write-down. Normalizing for those factors, he said inventory cost dollars would have been up in the high single-digit range.

Tariffs remained a key topic on the call. Mathias said the company expects a $20 million incremental tariff headwind in the second quarter versus last year. The company is planning for a 10% tariff rate on imports in the second quarter and 15% for the balance of the year.

Mathias said American Eagle Outfitters has applied for roughly $190 million in tariff refunds and anticipates a $140 million net cash benefit, though that benefit is not included in guidance. He said the company has received more than $100 million back so far and has about $75 million in the bank net of amounts owed to a third party after selling a portion of the claims.

Guidance Calls for Continued Aerie Strength For the second quarter, the company expects comparable sales growth in the mid- to high-single-digit range. Mathias said Aerie and OFFLINE are expected to continue growing in the high teens to low 20% range, while American Eagle is expected to be flat to down low single digits.

The company expects second-quarter operating income of $45 million to $50 million, including the $20 million tariff headwind. SG&A is expected to rise in the mid-teens, primarily due to continued advertising investment.

For the full year, American Eagle Outfitters expects operating profit of $390 million to $410 million, based on consolidated comparable sales growth in the mid-single-digit range. Mathias said the company expects capital expenditures of $250 million to $260 million.

In the back half of the year, Mathias said the company expects American Eagle comparable sales in the low single-digit range, while Aerie is expected to moderate to high single-digit to low double-digit growth. He said that mix would support mid-single-digit comparable sales growth for the total portfolio.

Capital Returns and Store Plans The company returned $74 million to shareholders in the quarter, including $21 million through its quarterly dividend and $53 million through repurchases of 3 million shares. Capital expenditures totaled $61 million. American Eagle Outfitters ended the quarter with $103 million in cash and approximately $620 million of total liquidity, including its revolver.

Schottenstein also highlighted the opening of the company’s West Coast distribution center in Phoenix, which went live in early May. He said the facility supports efforts to optimize the distribution network, improve inventory placement and give customers more options for receiving products.

On stores, Mathias said the company still expects roughly 25 net closures for the American Eagle brand this year, along with about 40 Aerie and OFFLINE openings. He said the company is planning around 80 American Eagle remodel projects, with the program nearing completion after potentially one more year.

Schottenstein said the company remains optimistic despite a fluid retail environment. “We think American Eagle’s positioned very well,” he said, adding that the brand offers “great value” and “great quality” to consumers.

About American Eagle Outfitters NYSE: AEOAmerican Eagle Outfitters, Inc NYSE: AEO is a leading American specialty retailer offering apparel, accessories and personal care products for men and women. The company's flagship brand, American Eagle, focuses on casualwear including denim, tops, outerwear and accessories targeted primarily at teens and young adults. In addition to its core apparel lines, the company operates the Aerie brand of intimates, loungewear and swimwear, which has gained recognition for its body-positive marketing and inclusive sizing.

American Eagle Outfitters conducts business through a combination of over 900 brick-and-mortar stores in North America and Greater China, complemented by a growing e-commerce platform that serves customers around the globe.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

Should You Invest $1,000 in American Eagle Outfitters Right Now?Before you consider American Eagle Outfitters, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and American Eagle Outfitters wasn't on the list.

While American Eagle Outfitters currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

The space race is growing fast, and you don’t have to have gotten in early on SpaceX to profit. This report shows seven space stocks you can buy today that may grow as rockets, satellites, defense, space internet, and new space technology become more important.

Get This Free Report

American Eagle Outfitters (AEO - Free Report) reported $1.2 billion in revenue for the quarter ended April 2026, representing a year-over-year increase of 9.7%. EPS of $0.14 for the same period compares to -$0.29 a year ago.

The reported revenue compares to the Zacks Consensus Estimate of $1.18 billion, representing a surprise of +0.94%. The company delivered an EPS surprise of +25.34%, with the consensus EPS estimate being $0.11.

While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.

Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance.

Here is how American Eagle performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

Number of stores - AE Brand: 804 compared to the 801 average estimate based on three analysts.Number of stores - Aerie stand-alone (incl. OFFL/NE): 335 compared to the 341 average estimate based on three analysts.Number of stores - Total (EOP): 1,170 compared to the 1,175 average estimate based on three analysts.Gross square footage - Total: 7.22 Msq ft compared to the 7.33 Msq ft average estimate based on two analysts.Comparable store sales- American Eagle Outfitters: -2% versus 2.6% estimated by two analysts on average.Comparable store sales: 8% versus 8.9% estimated by two analysts on average.Comparable store sales - Aerie: 25% versus 21.2% estimated by two analysts on average.Total net revenue- American Eagle: $678.48 million compared to the $717.34 million average estimate based on three analysts. The reported number represents a change of -2.2% year over year.Total net revenue- Aerie: $480.83 million compared to the $434.27 million average estimate based on three analysts. The reported number represents a change of +33.6% year over year.View all Key Company Metrics for American Eagle here>>>

Shares of American Eagle have returned +2.6% over the past month versus the Zacks S&P 500 composite's +5% change. The stock currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term.

SummaryCompaniesGap cuts annual sales forecast, American Eagle maintains outlookAnalysts highlight Gap's Old Navy and American Eagle brands as key weak spotsGap shares fall 17%, American Eagle down 12%May 29 - Shares of Gap (GAP.N), opens new tab and American Eagle Outfitters (AEO.N), opens new tab tumbled over ‌12% on Friday after both retailers issued weak forecasts, signaling deepening pressure on consumer discretionary spending.

The Old Navy parent cut its annual sales forecast as it works through a turnaround, while American Eagle kept its forecasts intact but cautioned on near-term gross margins, with ​both flagging weakness in certain women's apparel categories.

The Reuters Inside Track newsletter is your essential guide during the World Cup. Sign up here.

Gap stock is on track for its worst day in ​a year. Broader pressure was also felt in Europe, with Stockholm-listed shares of H&M (HMb.ST), opens new tab ⁠falling about 1% earlier on Friday.

The results underscore a widening split in consumer spending, with record-low sentiment driven by ​the Iran war forcing lower-income households to cut back, even as higher-income shoppers remain selectively willing to spend.

Earlier this ​week, Abercrombie & Fitch (ANF.N), opens new tab and Bath & Body Works (BBWI.N), opens new tab posted strong quarterly results, indicating continued appetite from American shoppers for affordable indulgence.

"(Gap's) moderated outlook is disappointing against the backdrop of a relatively resilient consumer through the first quarter of the fiscal year, broadly speaking," Telsey Advisory ​analyst Dana Telsey said.

Pressure at Gap was centered around Old Navy, where seasonal women's apparel, including dresses, failed to ​connect with shoppers, analysts said. BTIG analysts called Old Navy the "key swing factor."

However, some analysts said that the company's push into ‌the ⁠higher-margin beauty category could help Gap in the longer term.

Item 1 of 3 American Eagle clothing is seen at their store at the Woodbury Common Premium Outlets in Central Valley, New York, U.S., February 15, 2022. REUTERS/Andrew Kelly

[1/3]American Eagle clothing is seen at their store at the Woodbury Common Premium Outlets in Central Valley, New York, U.S., February 15, 2022. REUTERS/Andrew Kelly Purchase Licensing Rights, opens new tab

American Eagle slumps sharply while Gap underperforms and broader apparel and market indices post modest gains.American Eagle also faced challenges as the strength at Aerie failed to offset weakness at its core brand, with women’s bottoms hurt by shifting trends and a colder spring.

The company recently launched another campaign with actor Sydney Sweeney to attract Gen Z shoppers, a year after a viral and ​controversial ad featuring Sweeney fueled ​a stock rally.

Barclays analysts, ⁠however, cautioned that repeating last year's success may be difficult even as marketing spending is expected to recur in the current quarter.

The American Eagle brand continues to lag ​Aerie by a wide margin, challenging expectations of improvement, despite the brand's plans to ​correct its ⁠women's assortment for the back-to-school season, Telsey added.

Sales growth at Gap’s Old Navy, American Eagle’s namesake brand coolsGap currently trades at 10.30 times its estimated earnings for the next 12 months, compared with 9.70 times for American Eagle and 7.43 times for Abercrombie & Fitch (ANF.N), opens new tab, according to LSEG data.

American Eagle fell ⁠as ​much as 19% on Friday, adding to 2026 losses of 32%. ​Gap was down about 2% this year as of Thursday's close.

Reporting by Akriti Shah, Siddarth S and Neil J Kanatt in Bengaluru; Editing by Vijay Kishore

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Akrit Shah is a broker research and markets correspondent at Reuters, reporting on brokerage firms, equity research, market trends, and corporate earnings across the U.S. She has several years of experience in journalism and digital media, and previously held roles in digital marketing and social media. Akrit has trained extensively in financial reporting at Reuters and holds certifications in digital marketing. She is a Javaphile who enjoys writing poems and quotes.

Despite Its Plunge, American Eagle Outfitters Is Still An Excellent Fit For Your Portfolio

Key Takeaways AEO posted Q1 EPS of 14 cents on $1.20B revenues, topping consensus estimatesAEO's Aerie brand delivered 25% comps and 33.6% revenue growth on strong multichannel demand.AEO's FY26 outlook assumes 10% Q2 tariffs and 15% in 2H, with operating income guided at $390-$410M. American Eagle Outfitters, Inc. (AEO - Free Report) reported solid first-quarter fiscal 2026 results wherein both the top and bottom lines surpassed the Zacks Consensus Estimate. Meanwhile, revenues increased from the prior-year figures.

AEO posted earnings of 14 cents per share in the fiscal first quarter, surpassing the Zacks Consensus Estimate of 11 cents.

The company benefited from strong demand across its portfolio, led by continued momentum at Aerie, which delivered standout multi-channel performance and profitability. Management credited compelling product assortments and the ongoing resonance of the “100% Aerie REAL” campaign for deepening customer connection and supporting growth.

An Insight Into AEO’s Q1 RevenuesTotal net revenues of $1.20 billion jumped 10% year over year and surpassed the Zacks Consensus Estimate of $1.18 billion. This was backed by consolidated comparable sales (comps) and positive results across Aerie brand. Comps edged up 8% in the quarter. Our model predicted positive comps of 7.4% for the fiscal first quarter.

Brand-wise, revenues inched down 2.2% year over year to $678.5 million at the American Eagle brand. Also, comps for the brand declined 2%.

Revenues jumped 33.6% year over year to $480.8 million for the Aerie brand. Comps for the Aerie brand rose 25%. We expected sales growth of 4.1% year over year at the American Eagle brand and a 13.3% rise at Aerie for the reported quarter.

An Insight Into AEO’s Margins & ExpensesGross profit inched up 41% year over year to $456 million. The gross margin of 38.2% expanded 860 basis points (bps) from the prior-year period, reflecting a meaningfully stronger merchandise margin profile and better cost leverage. The gain was mainly driven by a 710-basis-point lift in merchandise margins, largely because the prior-year period included a $75 million inventory write-down. In addition, buying, occupancy and warehousing (BOW) costs improved by 150 bps, helped by higher sales and ongoing cost-optimization efforts.

Selling, general and administrative (SG&A) expenses increased 11% year over year to $376 million. As a percentage of sales, SG&A expenses increased 40 bps year over year. The increase was led by planned investments in advertising, somewhat offset by leverage in the rest of the expense base.

Operating income came in at $28 million, a notable improvement from an operating loss of $85 million a year ago, and management noted that operating profit exceeded first-quarter guidance.

AEO’s Financial Health SnapshotAmerican Eagle ended the fiscal first quarter with cash and cash equivalents of $103.3 million. Total shareholders’ equity was $1.64 billion as of May 2, 2026. Ending inventory rose 27% year over year to $817 million, while inventory units increased 5%. Management said the higher inventory cost reflects this year’s tariff impact and the fact that last year’s inventory balance was reduced by an inventory write-down. Capital expenditures were $61 million in the fiscal first quarter.

AEO bought back nearly 3 million shares for about $53 million. Additionally, the company distributed $21 million to its shareholders through its quarterly cash dividend of $0.125 per share.

AEO’s Q2 & FY26 Outlook With Tariff AssumptionsAmerican Eagle noted that all guidance is based on estimates and bakes in tariff assumptions of 10% on second-quarter receipts and 15% for the back half of fiscal 2026, while excluding any benefit from IEEPA tariff refunds.

For the second quarter of fiscal 2026, the company expects comparable sales to increase at a mid-to-high single-digit rate, gross margin to decline year over year, SG&A expenses to rise in the mid-teens, and depreciation and amortization to be in the mid-$50 million range. Operating income is guided to $45 million to $50 million, with a weighted average share count in the low 170 million range.

For fiscal 2026, AEO sees comparable sales to rise by mid-single digits, gross margin to increase year over year, SG&A to grow by high-single digits, depreciation and amortization to total around $220 million, and operating income to range between $390 million and $410 million, again assuming a low 170 million weighted average share count. AEO expects capital expenditure of $250-$260 million for fiscal 2026.

Shares of the Zacks Rank #4 (Sell) company have lost 25.2% in the past six months compared with the industry’s drop of 0.3%.

AEO Stock 6-Month Price Peformance
Image Source: Zacks Investment Research

Key PicksSome better-ranked stocks in the retail space are Tapestry, Inc. (TPR - Free Report) , Victoria's Secret & Co. and Levi Strauss & Co. (LEVI - Free Report) .

Tapestry is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Tapestry’s current fiscal-year earnings and sales indicates growth of 36.3% and 13.8%, respectively, from the year-ago actuals. TPR delivered a trailing four-quarter average earnings surprise of 15.6%.

Victoria's Secret is a specialty retailer of women's intimates, sleepwear, apparel, sport and swimwear, and prestige fragrances and body care. It currently has a Zacks Rank of 2 (Buy).

The Zacks Consensus Estimate for Victoria's Secret’s current fiscal-year sales and earnings indicates growth of 6.2% and 16.3%, respectively, from the year-ago reported numbers. VSCO delivered a trailing four-quarter earnings surprise of 55.1%, on average.

Levi Strauss designs and markets jeans, casual wear and related accessories for men, women and children. It currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for Levi Strauss’ current fiscal-year earnings and sales suggests growth of 11.9% and 5.2%, respectively, from the year-ago actuals. LEVI delivered a trailing four-quarter average earnings surprise of 21.4%.

Shares of American Eagle Outfitters (AEO +3.75%) sank on Friday after the apparel company's fiscal first-quarter sales metrics disappointed investors.

Image source: Getty Images.

Diverging brands AEO's revenue rose 10% year over year to $1.2 billion in the quarter ended May 2.

The gains were fueled by a 25% jump in sales for the retailer's fast-growing intimate apparel and loungewear brand, Aerie, to $481 million.

However, revenue at the company's namesake American Eagle brand declined by 2% to $678 million. The shortfall came even as AEO invested heavily in marketing campaigns featuring popular actress Sydney Sweeney.

Today's Change

(

3.75

%) $

0.69

Current Price

$

18.98

Still, AEO's gross margin improved by 8.6 percentage points to 38.2%, as the retailer recovered from sizable inventory write-downs in the prior-year quarter. That helped it generate an operating profit of $28 million, compared to an adjusted loss of $68 million in the year-ago period.

All told, AEO's first-quarter adjusted earnings per share came in at $0.14 versus a loss of $0.29 last year.

AEO's CEO is confident American Eagle can recover Looking ahead, management reaffirmed its full-year operating income forecast of $390 to $410 million for fiscal 2026.

During a conference call with analysts, CEO Jay Schottenstein said the company will work to sharpen merchandise selection at American Eagle and prioritize marketing initiatives that more directly convert into sales rather than drive brand awareness.

"We remain highly confident in the relevance and resilience of the overall AE brand and in our ability to strengthen execution and drive better results moving forward," Schottenstein said.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends American Eagle Outfitters. The Motley Fool has a disclosure policy.

American Eagle Outfitters, Inc. (AEO) Q1 2026 Earnings Call Transcript

-

PITTSBURGH--(BUSINESS WIRE)--American Eagle Outfitters, Inc. (NYSE: AEO) announced a quarterly cash dividend of $0.125 per share. The dividend was declared on June 9, 2026 and is payable on July 24, 2026 to stockholders of record at the close of business on July 10, 2026.

About American Eagle Outfitters, Inc.

American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global specialty retailer with a portfolio of beloved apparel brands including American Eagle, Aerie, OFFL/NE by Aerie, Todd Snyder and Unsubscribed. Rooted in optimism, inclusivity and authenticity, AEO’s brands empower every customer to celebrate their unique personal style by offering casual, comfortable, timeless outfitting and high-quality products that are made to last.

AEO Inc. operates stores in the United States, Canada and Mexico, with merchandise available in more than 30 countries through a global network of license partners. Additionally, the company operates a robust e-commerce business across its brands. For more information, visit aeo-inc.com.

More News From American Eagle Outfitters, Inc.

Back to Newsroom