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Can AEO's Brand Buzz & Store Revamp Keep the Momentum Going?
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Key Takeaways
AEO delivered $1.28B in Q2 revenues, its second-highest ever for the quarter, with EPS up 15% to $0.45.
Plans include 30 new Aerie and Offline stores, 40-50 AE remodels and 35-40 AE closures.
Collaborations with Sydney Sweeney and Travis Kelce drew 700K new customers and fueled denim sellouts.
American Eagle Outfitters, Inc. (AEO - Free Report) is riding a fresh wave of energy. The retailer posted $1.28 billion in revenues in the second quarter of fiscal 2025, its second-highest second-quarter performance ever — while earnings per share climbed 15% year over year to 45 cents. Stronger traffic across channels, fueled by bold campaigns and better product assortments, helped offset softer average unit prices and positioned the business for a stronger back-to-school season.
The company is reshaping its store footprint to keep pace with changing shopping habits. This year, AEO plans to open about 30 Aerie and Offline locations and remodel 40-50 American Eagle stores, giving customers a modernized experience. At the same time, it expects to close 35-40 AE stores, ensuring that its fleet is more productive while balancing the growth of digital channels.
Innovation is at the center of the rebound. Aerie rebounded with 3% comp growth, hitting a record fiscal second-quarter revenues, while the American Eagle brand gained traction in women’s jeans, tops and men’s graphics. Star-studded collaborations with Sydney Sweeney and Travis Kelce generated over 40 billion impressions and brought in more than 700,000 new customers, fueling denim sellouts and a surge in brand buzz.
Alongside growth investments, AEO has returned significant capital to its shareholders. Year to date, the company has distributed $276 million through dividends and share repurchases, including completing a $200 million accelerated buyback program earlier this year. With cash reserves of $127 million and liquidity of around $400 million, management remains confident in balancing shareholder value creation with strategic reinvestment.
Management expects comps to rise in the low single digits for the back half of 2025, with operating income projected to be between $95 million and $100 million in the third quarter and between $125 million and $130 million in the fourth quarter. While tariffs are set to weigh on costs by $70 million, AEO’s blend of product innovation, cultural marketing firepower and disciplined cost controls could keep its momentum flying high.
AEO’s Zacks Rank & Share Price Performance
Shares of this Zacks Rank #3 (Hold) company have surged 82.2% over the past three months, outperforming the industry, which rose 10.5%.
AEO Stock's Past Three-Month Performance
Image Source: Zacks Investment Research
Is AEO a Value Play Stock?
AEO currently trades at a forward 12-month P/E ratio of 14.23X, which is lower than the industry average of 18.84X and the sector average of 24.93X. This valuation positions the stock at a modest discount relative to both its direct peers and the broader consumer staples sector.
AEO P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
Stocks to Consider
Wolverine World Wide, Inc. (WWW - Free Report) designs, manufactures, sources, markets, licenses and distributes footwear, apparel and accessories. It currently sports a Zacks Rank of 1 (Strong Buy). WWW delivered a trailing four-quarter average earnings surprise of 39.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Wolverine’s current fiscal-year earnings and sales indicates growth of 46.2% and 6.5%, respectively, from the year-ago actuals.
Sally Beauty Holdings, Inc. (SBH - Free Report) operates as a specialty retailer and distributor of professional beauty supplies. It currently flaunts a Zacks Rank of 1. SBH delivered a trailing four-quarter average earnings surprise of 8.3%.
The Zacks Consensus Estimate for Sally Beauty’s current fiscal-year earnings indicates growth of 8.9% from the year-ago actuals.
Build-A-Bear Workshop, Inc. (BBW - Free Report) operates as a multi-channel retailer of plush animals and related products. It sports a Zacks Rank of 1 at present. BBW delivered a trailing four-quarter earnings surprise of 21.3%, on average.
The Zacks Consensus Estimate for Build-A-Bear Workshop’s current fiscal-year sales and earnings indicates growth of 7.4% and 6.9%, respectively, from the prior-year levels.
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Can AEO's Brand Buzz & Store Revamp Keep the Momentum Going?
Key Takeaways
American Eagle Outfitters, Inc. (AEO - Free Report) is riding a fresh wave of energy. The retailer posted $1.28 billion in revenues in the second quarter of fiscal 2025, its second-highest second-quarter performance ever — while earnings per share climbed 15% year over year to 45 cents. Stronger traffic across channels, fueled by bold campaigns and better product assortments, helped offset softer average unit prices and positioned the business for a stronger back-to-school season.
The company is reshaping its store footprint to keep pace with changing shopping habits. This year, AEO plans to open about 30 Aerie and Offline locations and remodel 40-50 American Eagle stores, giving customers a modernized experience. At the same time, it expects to close 35-40 AE stores, ensuring that its fleet is more productive while balancing the growth of digital channels.
Innovation is at the center of the rebound. Aerie rebounded with 3% comp growth, hitting a record fiscal second-quarter revenues, while the American Eagle brand gained traction in women’s jeans, tops and men’s graphics. Star-studded collaborations with Sydney Sweeney and Travis Kelce generated over 40 billion impressions and brought in more than 700,000 new customers, fueling denim sellouts and a surge in brand buzz.
Alongside growth investments, AEO has returned significant capital to its shareholders. Year to date, the company has distributed $276 million through dividends and share repurchases, including completing a $200 million accelerated buyback program earlier this year. With cash reserves of $127 million and liquidity of around $400 million, management remains confident in balancing shareholder value creation with strategic reinvestment.
Management expects comps to rise in the low single digits for the back half of 2025, with operating income projected to be between $95 million and $100 million in the third quarter and between $125 million and $130 million in the fourth quarter. While tariffs are set to weigh on costs by $70 million, AEO’s blend of product innovation, cultural marketing firepower and disciplined cost controls could keep its momentum flying high.
AEO’s Zacks Rank & Share Price Performance
Shares of this Zacks Rank #3 (Hold) company have surged 82.2% over the past three months, outperforming the industry, which rose 10.5%.
AEO Stock's Past Three-Month Performance
Image Source: Zacks Investment Research
Is AEO a Value Play Stock?
AEO currently trades at a forward 12-month P/E ratio of 14.23X, which is lower than the industry average of 18.84X and the sector average of 24.93X. This valuation positions the stock at a modest discount relative to both its direct peers and the broader consumer staples sector.
AEO P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
Stocks to Consider
Wolverine World Wide, Inc. (WWW - Free Report) designs, manufactures, sources, markets, licenses and distributes footwear, apparel and accessories. It currently sports a Zacks Rank of 1 (Strong Buy). WWW delivered a trailing four-quarter average earnings surprise of 39.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Wolverine’s current fiscal-year earnings and sales indicates growth of 46.2% and 6.5%, respectively, from the year-ago actuals.
Sally Beauty Holdings, Inc. (SBH - Free Report) operates as a specialty retailer and distributor of professional beauty supplies. It currently flaunts a Zacks Rank of 1. SBH delivered a trailing four-quarter average earnings surprise of 8.3%.
The Zacks Consensus Estimate for Sally Beauty’s current fiscal-year earnings indicates growth of 8.9% from the year-ago actuals.
Build-A-Bear Workshop, Inc. (BBW - Free Report) operates as a multi-channel retailer of plush animals and related products. It sports a Zacks Rank of 1 at present. BBW delivered a trailing four-quarter earnings surprise of 21.3%, on average.
The Zacks Consensus Estimate for Build-A-Bear Workshop’s current fiscal-year sales and earnings indicates growth of 7.4% and 6.9%, respectively, from the prior-year levels.