Sweeney's "Great Jeans" Fuel American Eagle Sales, Shares Jump Most On Record

[Conservative Angle]

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Sweeney's "Great Jeans" Fuel American Eagle Sales, Shares Jump Most On Record

Update (1655ET):

American Eagle shares jumped the most on record on Thursday after second-quarter revenue and same-store sales beat Bloomberg Consensus estimates. Fueling sales and driving a dramatic turnaround for the clothing retailer has been the buzz around the "Sydney Sweeney has great jeans" ad campaign, launched in July.

Shares closed up 38% on Thursday - the most on record. Year-to-date shares are up about 13%.

The $20 handle seems pivotal for bulls.



Wall Street analysts are divided on the stock, with 33.4% rating it a "sell," 58.3% a "hold," and only 8.3% a "buy." The average 12-month price target is $14.65.



Corporate America, take note:



* * *

American Eagle shares surged in premarket trading in New York after the clothing retailer reported second-quarter revenue that exceeded Wall Street consensus estimates, as tracked by Bloomberg. The stronger-than-expected results were primarily driven by buzz around the "Sydney Sweeney has great jeans" ad campaign launched in July.

"The fall season is off to a positive start. Fueled by stronger product offerings and the success of recent marketing campaigns with Sydney Sweeney and Travis Kelce," AE CEO Jay Schottenstein wrote in a statement to investors.

AE reported same-store sales down 1% in the second quarter that ended August 2, exceeding the average analyst estimate. Revenue also outpaced expectations.

Here's a breakdown of second-quarter results:

• 
  Revenue: $1.28B, down .6% YoY but above Bloomberg consensus of $1.23B.
  
• 
  Store Count: 1,185 total stores, up .8% QoQ and slightly above estimates (1,181).
  
• 
  AE Brand Stores: 829, down 1.7% YoY but ahead of consensus (820.5).
  
• 
  New Openings: 2 AE stores opened in the quarter, a 33% YoY decline.
  
• 
  Consolidated Stores: 1,176 at the start of the period, matching estimates. Square Footage: 7.27M sq. ft., up 0.5% QoQ, topping consensus (7.25M).
  

Total Revs 2Q



The third quarter forecast also topped consensus estimates:

• Operating income: $95M–$100M vs. $92.1M est.

Shares of American Eagle rose more than 24% in premarket.



Here's what Wall Street analysts are saying (courtesy of Bloomberg):

Bloomberg Intelligence

• 
  Analyst Mary Ross Gilbert says American Eagle is poised to exceed low-single-digit comparable-sales growth in 3Q, with performance likely aided by its viral Sydney Sweeney campaign and Travis Kelce collaboration
  
• 
  "Operating income guidance, which is above consensus, also has upside amid more full-price selling"
  

Morgan Stanley (equal-weight, PT $10)

• 
  Analyst Alex Straton says the company "seems to have mostly corrected 1Q25 product mis-execution quickly"
  
• 
  "Higher campaign-related SG&A (selling, general, and administrative ) spend has not come with as much potential profitability degradation as we cautioned"
  

Jefferies (hold, PT $11)

• 
  Analyst Corey Tarlowe says AEO provided 3Q and FY guidance that exceeds the Street's expectations for comp sales and operating income
  
• 
  "Overall, we are encouraged by the results and 2H guidance"
  

Vital Knowledge

• 
  AEO reported big upside on EPS, with the beat driven by higher GMs, cost controls, and better sales (comps were -1% vs. the Street -2.6%, w/particularly robust performance at Aerie, which posted comps +3% vs. the Street -1.8% while the AE brand fell a bit short with comps -3%)," writes analyst Adam Crisafulli
  
• 
  Says that while the FQ2 results are very strong, the shortfall in AE comps and the inline F25 guide could temper investor enthusiasm
  

. . .

Tyler Durden
Thu, 09/04/2025 - 16:55

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