We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will American Eagle's Strategic Initiatives and Brand Expansions Aid?
Read MoreHide Full Article
Key Takeaways
AEO drives growth through digital investments, store optimization and brand expansion efforts.
Aerie sales rose 3.2% in Q2 2025, with comps up 3%, reinforcing its strength in activewear.
AEO plans 30 new Aerie/offline stores, 40-50 remodels and 35-40 closures to streamline operations.
American Eagle Outfitters, Inc. (AEO - Free Report) is actively executing its strategic initiatives, aimed at driving long-term growth, enhancing operational efficiency and improving agility. The company has been investing in its digital platform to grow its e-commerce business and enrich customer experience. AEO has been witnessing a spectacular response to its Aerie brand for quite some time.
The company is focused on building brand awareness and expanding into new categories. The ongoing momentum and market share growth in OFFL/NE Activewear are Aerie’s most promising long-term growth drivers. AEO is focused on reinvigorating the brand’s growth. During the second quarter of fiscal 2025, revenues at Aerie jumped 3.2% year over year while the brand’s comparable store sales (comps) rose 3%. We expect sales for Aerie to increase 4.1% for the third quarter and 1.3% year over year for fiscal 2025.
The company is prioritizing investments across its digital channel, with foundational improvements to the shopping experience. It focuses on optimizing its store fleet to ensure the best locations, offering a seamless customer experience and tapping into additional growth opportunities. This year, the company is on track to open approximately 30 Aerie and offline locations and remodel 40-50 AE stores to feature a modern design. It anticipates shutting down 35-40 American Eagle locations by the end of the year.
The company has also been making inventory-management efforts. AEO has been navigating tariffs and implementing several mitigation strategies, involving partnering with its sourcing vendors to cut costs. Additionally, the company is diversifying its supply chain and focusing on reducing its sourcing exposure to China. It is focused on building upon its sales momentum, managing costs and making continued improvements to deliver profitability. For the third and fourth quarters of fiscal 2025, the company expects comps to rise in the low single digits.
AEO’s Price Performance, Valuation and Estimates
American Eagle’s shares have lost 6.8% year to date compared with the industry’s 11.6% decline.
Image Source: Zacks Investment Research
From a valuation standpoint, AEO trades at a forward price-to-earnings ratio of 12.22X compared with the industry’s average of 17.7X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AEO’s fiscal 2025 earnings per share (EPS) indicates a year-over-year decline of 37.4% while that of fiscal 2026 shows growth of 25.1%. The company’s EPS estimate for fiscal 2025 and fiscal 2026 has moved north in the past 30 days.
Image Source: Zacks Investment Research
American Eagle currently carries a Zacks Rank #3 (Hold).
The consensus estimate for Levi Strauss’ current financial-year EPS indicates growth of 4% from the year-ago figure. LEVI delivered an average earnings surprise of 25.9% in the trailing four quarters.
Genesco Inc. (GCO - Free Report) operates as a retailer and wholesaler of footwear, apparel and accessories, carrying a Zacks Rank #2 (Buy) at present. GCO delivered a trailing four-quarter earnings surprise of 32.4%, on average.
The Zacks Consensus Estimate for Genesco’s current fiscal-year EPS and sales indicates growth of 71.3% and 3.7%, respectively, from the year-ago period’s reported figures.
Allbirds, Inc. (BIRD - Free Report) , a lifestyle brand, currently has a Zacks Rank of 2. The company delivered a trailing four-quarter earnings surprise of 20.7%, on average.
The Zacks Consensus Estimate for BIRD’s current financial-year EPS indicates growth of 18% from the year-ago figure.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Will American Eagle's Strategic Initiatives and Brand Expansions Aid?
Key Takeaways
American Eagle Outfitters, Inc. (AEO - Free Report) is actively executing its strategic initiatives, aimed at driving long-term growth, enhancing operational efficiency and improving agility. The company has been investing in its digital platform to grow its e-commerce business and enrich customer experience. AEO has been witnessing a spectacular response to its Aerie brand for quite some time.
The company is focused on building brand awareness and expanding into new categories. The ongoing momentum and market share growth in OFFL/NE Activewear are Aerie’s most promising long-term growth drivers. AEO is focused on reinvigorating the brand’s growth. During the second quarter of fiscal 2025, revenues at Aerie jumped 3.2% year over year while the brand’s comparable store sales (comps) rose 3%. We expect sales for Aerie to increase 4.1% for the third quarter and 1.3% year over year for fiscal 2025.
The company is prioritizing investments across its digital channel, with foundational improvements to the shopping experience. It focuses on optimizing its store fleet to ensure the best locations, offering a seamless customer experience and tapping into additional growth opportunities. This year, the company is on track to open approximately 30 Aerie and offline locations and remodel 40-50 AE stores to feature a modern design. It anticipates shutting down 35-40 American Eagle locations by the end of the year.
The company has also been making inventory-management efforts. AEO has been navigating tariffs and implementing several mitigation strategies, involving partnering with its sourcing vendors to cut costs. Additionally, the company is diversifying its supply chain and focusing on reducing its sourcing exposure to China. It is focused on building upon its sales momentum, managing costs and making continued improvements to deliver profitability. For the third and fourth quarters of fiscal 2025, the company expects comps to rise in the low single digits.
AEO’s Price Performance, Valuation and Estimates
American Eagle’s shares have lost 6.8% year to date compared with the industry’s 11.6% decline.
Image Source: Zacks Investment Research
From a valuation standpoint, AEO trades at a forward price-to-earnings ratio of 12.22X compared with the industry’s average of 17.7X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AEO’s fiscal 2025 earnings per share (EPS) indicates a year-over-year decline of 37.4% while that of fiscal 2026 shows growth of 25.1%. The company’s EPS estimate for fiscal 2025 and fiscal 2026 has moved north in the past 30 days.
Image Source: Zacks Investment Research
American Eagle currently carries a Zacks Rank #3 (Hold).
Eye These Solid Picks in Retail
Levi Strauss & Co. (LEVI - Free Report) , designer and marketer of jeans, casual wear and related accessories, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Levi Strauss’ current financial-year EPS indicates growth of 4% from the year-ago figure. LEVI delivered an average earnings surprise of 25.9% in the trailing four quarters.
Genesco Inc. (GCO - Free Report) operates as a retailer and wholesaler of footwear, apparel and accessories, carrying a Zacks Rank #2 (Buy) at present. GCO delivered a trailing four-quarter earnings surprise of 32.4%, on average.
The Zacks Consensus Estimate for Genesco’s current fiscal-year EPS and sales indicates growth of 71.3% and 3.7%, respectively, from the year-ago period’s reported figures.
Allbirds, Inc. (BIRD - Free Report) , a lifestyle brand, currently has a Zacks Rank of 2. The company delivered a trailing four-quarter earnings surprise of 20.7%, on average.
The Zacks Consensus Estimate for BIRD’s current financial-year EPS indicates growth of 18% from the year-ago figure.