American Eagle mentioned Wednesday its partnership with Sydney Sweeney has been its “finest” promoting marketing campaign thus far because it introduced fiscal second-quarter earnings that beat expectations.
The corporate’s splashy, but controversial, marketing campaign with the “Euphoria” star led to some criticism and blowback however the launch, coupled with a latest partnership with Taylor Swift’s new fiancé Travis Kelce, has led to new buyer acquisition and optimistic site visitors throughout channels.
American Eagle inventory soared greater than 20% in after-hours buying and selling Wednesday.
“The autumn season is off to a optimistic begin. Fueled by stronger product choices and the success of latest advertising campaigns with Sydney Sweeney and Travis Kelce, we have now seen an uptick in buyer consciousness, engagement and comparable gross sales,” CEO Jay Schottenstein mentioned in a information launch. “We stay up for constructing on our progress and the continued energy of our iconic manufacturers to drive larger profitability, long-term progress and shareholder worth.”
The corporate additionally re-issued its full-year steerage after withdrawing it earlier this 12 months. It now expects comparable gross sales to be roughly flat, higher than the 0.2% decline analysts had anticipated, in keeping with StreetAccount.
It nonetheless expects gross margin to be down in the course of the 12 months, however it made key modifications to its outlook for working earnings, which is bearing the brunt of the tariff influence. The corporate is now anticipating its full-year working earnings to be between $255 million and $265 million, down from a earlier vary of between $360 million and $375 million.
Here is how American Eagle carried out in the course of the quarter in contrast with what Wall Avenue was anticipating, based mostly on a survey of analysts by LSEG:
- Earnings per share: 45 cents vs. 21 cents anticipated
- Income: $1.28 billion vs. $1.24 billion anticipated
The corporate’s reported internet earnings for the three-month interval that ended Aug. 2 was $77.6 million, or 45 cents per share, in contrast with $77.3 million, or 39 cents per share, a 12 months earlier.
Gross sales fell to $1.28 billion, down barely from $1.29 billion a 12 months earlier.
For the present quarter, American Eagle is anticipating comparable gross sales to be up within the low single digit vary, higher than the 0.9% uptick analysts had anticipated, in keeping with StreetAccount. It is anticipating the identical pattern in the course of the fourth quarter.
Up to now this 12 months, American Eagle’s efficiency has been marred by merchandising missteps, tariffs and an unsure shopper that is being extra selective when spending cash on merchandise like garments and sneakers.
To show issues round, American Eagle launched its marketing campaign with Sweeney forward of the essential back-to-school buying season, however in some methods, that additionally backfired when it incited outrage from some prospects.
The slogan American Eagle selected for the marketing campaign — “Sydney Sweeney has nice denims” — led some far-left critics to say the comment was a double entendre and a nod to eugenics. In the meantime, these on the precise celebrated the marketing campaign, main President Donald Trump to weigh in and name it the “hottest” advert round.
Extra broadly, the marketing campaign additionally confronted pushback from some who mentioned the advertisements had been overly sexualized and out of contact, main them to surprise what sort of shopper the corporate was focusing on.
The marketing campaign launched on July 23 on the tail finish of American Eagle’s fiscal second quarter, however the firm mentioned it is so far been a hit, regardless of the pushback it acquired. The Sweeney marketing campaign, together with the partnership it launched with Kelce, has led to “significant enchancment within the enterprise” with comps to date this quarter up within the mid-single digits. American Eagle mentioned it is gained 700,000 new prospects and that site visitors throughout channels has been “constantly optimistic” all through August, regardless of some information studies indicating the opposite.
The Sweeney marketing campaign has led to denim sellouts, double-digit site visitors progress and elevated consciousness and engagement, the corporate mentioned. The Sydney Jacket bought out in someday and The Sydney Jean, a customized fashion that donated 100% of proceeds to the Disaster Textual content Line, which offers psychological well being assist, bought out in someday.
In the meantime, American Eagle’s launch with Kelce, the Kansas Metropolis Chiefs tight finish, the day after he introduced his engagement to the pop star, drove 3 times extra gross sales in someday than previous collaborations did in per week, the corporate mentioned. Lots of the gadgets, particularly ones worn by Kelce and his fellow athletes, bought out.
American Eagle’s partnerships with Sweeney and Kelce spotlight the work the retailer is doing to remain related with customers and reduce via the noise as spending stays gentle.
It is also dealing with stiff competitors from friends like Abercrombie & Fitch, Hole and Levi’s. Lately, Hole launched its “Higher in Denim” marketing campaign that includes Katseye and Kelis’s 2003 hit “Milkshake.” In the meantime, Levi’s has had an ongoing marketing campaign that includes Beyoncé whereas Abercrombie has taken a sports activities focus and partnered with the NFL.
Compounding American Eagle’s challenges is the unsure tariff setting. American Eagle has been working to scale back its reliance on China to underneath 10% this 12 months however it additionally has a heavy manufacturing presence in Vietnam and India, which have been the topic of reciprocal tariffs.