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.
American Eagle Posts Strong Q3 Results, Comparable Sales Rise 4%
Read MoreHide Full Article
Key Takeaways
American Eagle delivered Q3 revenues of $1.36B with higher comps and beats on both top and bottom lines.
Stronger sales at AE and Aerie lifted results, with digital traffic improving throughout the quarter.
Management raised Q4 operating income guidance to $155-$160M on expected 8-9% comp growth.
American Eagle Outfitters, Inc. (AEO - Free Report) reported solid third-quarter fiscal 2025 results and encouraged adjusted operating profit guidance for fourth-quarter and fiscal 2025. The company delivered top and bottom-line beats in the fiscal third quarter, with both metrics increasing year over year.
AEO posted earnings of 53 cents per share in the fiscal third quarter, surpassing the Zacks Consensus Estimate of 43 cents. Also, the bottom line increased 10.4% from the year-earlier quarter.
Shares of the Zacks Rank #3 (Hold) company have gained 10.9% in the past three months against the industry’s drop of 1.1%.
An Insight Into AEO’s Q3 Revenues
Total net revenues of $1.36 billion jumped 6% year over year and came above the Zacks Consensus Estimate of $1.32 billion. This was backed by consolidated comparable sales (comps) and positive results across brands. Comps edged up 4% in the quarter. Our model predicted positive comps of 3% for the fiscal third quarter.
American Eagle Outfitters, Inc. Price, Consensus and EPS Surprise
Brand-wise, revenues inched up 2.6% year over year to $853.7 million at the American Eagle brand. Also, comps for the brand inched up 1%.
Revenues jumped 12.6% year over year to $462 million for the Aerie brand. Comps for the Aerie brand rose 11%. We expected a sales dip of 1.5% year over year at the American Eagle brand but a 4.1% rise at Aerie in the reported quarter. Traffic has improved consistently throughout the quarter, particularly within its digital selling channels including both the AE and Aerie.
An Insight Into AEO’s Margins & Expenses
Gross profit inched up 4.8% year over year to $551.9 million. The gross margin of 40.5% dipped 40 basis points (bps) from the year-ago quarter. The net tariff impact was $20 million or 150 bps to gross margin. Increased markdowns were mainly offset by higher sales and lower costs, with favorability in freight. Additionally, buying, occupancy and warehousing (BOW) expenses leveraged 20 bps year over year on positive sales.
Selling, general and administrative (SG&A) expenses increased 10% year over year to $386.3 million. As a percentage of sales, SG&A expenses increased 110 bps year over year. The increase was led by planned investments in advertising, somewhat offset by leverage in the rest of the expense base.
American Eagle reported an adjusted operating income of $112.6 million, down 8.9% year over year on an adjusted basis, backed by greater-than-expected demand. Operating margin of 8.3% fell from adjusted operating margin of 9.6% last year.
AEO’s Financial Health Snapshot
American Eagle ended the fiscal third quarter with cash and cash equivalents of $112.8 million, with a net long-term debt of $210 million. Total shareholders’ equity was $1.63 billion as of Nov. 1, 2025. The company had a total liquidity of roughly $560 million. Inventory increased 11% year over year to $891.2 million at the end of the reported quarter, reflecting higher demand, store openings and improved in-stocks. The inventory cost rise also consists of tariff impacts.
Capital expenditures were $70 million in the fiscal third quarter, with a year-to-date spend of $202 million. The company anticipates incurring capital expenditures of $275 million for fiscal 2025.
In the first half of fiscal 2025, the company made share repurchases of $231 million and year-to-date dividend payments of $64 million. In the fiscal third quarter, AEO has returned $21 million to shareholders via its quarterly cash dividend of $0.125 per share, with cash dividends of $64 million in the year-to-date period.
What to Expect From AEO Ahead?
The fourth-quarter fiscal 2025 has kicked off excellently. The company remains optimistic about the broad-based strength in its brands and channels, with momentum in Aerie and Offline. AEO’s inventory and product offerings are poised well for a successful holiday season, hence accomplishing a solid fourth-quarter result. The fourth-quarter outlook includes roughly $50 million of incremental tariff expenses. AEO is on track to introduce 22 Aerie and 26 Offline stores. The company will complete nearly 50 AE store remodels with complete upgrades to the modern design. The recent store upgrades are the Aventura Malland Sawgrass Mills in Miami and its new SoHo location in New York City.
Based on the quarter-to-date sales trends and the important selling weeks still ahead, management has raised fourth-quarter operating income guidance to the band of $155-$160 million based on comp sales growth of 8-9% with similar growth in total revenues. It had previously guided fourth-quarter operating income of $125-$130 million on comps in the positive low single digits. BOW costs are likely to rise owing to new store growth for Aerie and Offline, and higher digital penetration. SG&A is anticipated to increase in low- mid-single digits on investments in advertising.
Based on the top-line strength, management forecasts both BOW and SG&A to leverage in the final quarter of fiscal 2025. The tax rate is likely to be roughly 28% and the weighted average share count will be approximately 173 million. The company is highly focused for the rest of the current fiscal year, delivering solid profit flow-through and sustaining the momentum into 2026.
For the fiscal year, adjusted operating income guidance rose to $303-$308 million, with comps in the low single digits compared with the earlier guidance of adjusted operating income of $255-$265 million on flat comps. Gross margin is likely to decline year over year for the fourth quarter and fiscal 2025. SG&A is anticipated to increase in low mid-single digits. The tax rate is likely to be roughly 27% and the weighted average share count will be approximately 174 million. The outlook includes roughly $70 million of incremental tariff expenses.
The Zacks Consensus Estimate for GAP's current financial-year sales indicates growth of 1.8% from the year-ago figure. GAP delivered an average earnings surprise of 19.1% in the last four quarters.
Boot Barn (BOOT - Free Report) operates as a retailer of footwear, apparel and accessories, carrying a Zacks Rank #2 (Buy) at present. BOOT delivered a trailing four-quarter earnings surprise of 5.4%, on average.
The Zacks Consensus Estimate for Boot Barn’s current fiscal-year EPS and sales indicates growth of 20.5% and 16.2%, 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 18.5%, on average.
The Zacks Consensus Estimate for BIRD’s current financial-year EPS indicates growth of 19.9% from the year-ago figure.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
American Eagle Posts Strong Q3 Results, Comparable Sales Rise 4%
Key Takeaways
American Eagle Outfitters, Inc. (AEO - Free Report) reported solid third-quarter fiscal 2025 results and encouraged adjusted operating profit guidance for fourth-quarter and fiscal 2025. The company delivered top and bottom-line beats in the fiscal third quarter, with both metrics increasing year over year.
AEO posted earnings of 53 cents per share in the fiscal third quarter, surpassing the Zacks Consensus Estimate of 43 cents. Also, the bottom line increased 10.4% from the year-earlier quarter.
Shares of the Zacks Rank #3 (Hold) company have gained 10.9% in the past three months against the industry’s drop of 1.1%.
An Insight Into AEO’s Q3 Revenues
Total net revenues of $1.36 billion jumped 6% year over year and came above the Zacks Consensus Estimate of $1.32 billion. This was backed by consolidated comparable sales (comps) and positive results across brands. Comps edged up 4% in the quarter. Our model predicted positive comps of 3% for the fiscal third quarter.
American Eagle Outfitters, Inc. Price, Consensus and EPS Surprise
American Eagle Outfitters, Inc. price-consensus-eps-surprise-chart | American Eagle Outfitters, Inc. Quote
Brand-wise, revenues inched up 2.6% year over year to $853.7 million at the American Eagle brand. Also, comps for the brand inched up 1%.
Revenues jumped 12.6% year over year to $462 million for the Aerie brand. Comps for the Aerie brand rose 11%. We expected a sales dip of 1.5% year over year at the American Eagle brand but a 4.1% rise at Aerie in the reported quarter. Traffic has improved consistently throughout the quarter, particularly within its digital selling channels including both the AE and Aerie.
An Insight Into AEO’s Margins & Expenses
Gross profit inched up 4.8% year over year to $551.9 million. The gross margin of 40.5% dipped 40 basis points (bps) from the year-ago quarter. The net tariff impact was $20 million or 150 bps to gross margin. Increased markdowns were mainly offset by higher sales and lower costs, with favorability in freight. Additionally, buying, occupancy and warehousing (BOW) expenses leveraged 20 bps year over year on positive sales.
Selling, general and administrative (SG&A) expenses increased 10% year over year to $386.3 million. As a percentage of sales, SG&A expenses increased 110 bps year over year. The increase was led by planned investments in advertising, somewhat offset by leverage in the rest of the expense base.
American Eagle reported an adjusted operating income of $112.6 million, down 8.9% year over year on an adjusted basis, backed by greater-than-expected demand. Operating margin of 8.3% fell from adjusted operating margin of 9.6% last year.
AEO’s Financial Health Snapshot
American Eagle ended the fiscal third quarter with cash and cash equivalents of $112.8 million, with a net long-term debt of $210 million. Total shareholders’ equity was $1.63 billion as of Nov. 1, 2025. The company had a total liquidity of roughly $560 million. Inventory increased 11% year over year to $891.2 million at the end of the reported quarter, reflecting higher demand, store openings and improved in-stocks. The inventory cost rise also consists of tariff impacts.
Capital expenditures were $70 million in the fiscal third quarter, with a year-to-date spend of $202 million. The company anticipates incurring capital expenditures of $275 million for fiscal 2025.
In the first half of fiscal 2025, the company made share repurchases of $231 million and year-to-date dividend payments of $64 million. In the fiscal third quarter, AEO has returned $21 million to shareholders via its quarterly cash dividend of $0.125 per share, with cash dividends of $64 million in the year-to-date period.
What to Expect From AEO Ahead?
The fourth-quarter fiscal 2025 has kicked off excellently. The company remains optimistic about the broad-based strength in its brands and channels, with momentum in Aerie and Offline. AEO’s inventory and product offerings are poised well for a successful holiday season, hence accomplishing a solid fourth-quarter result. The fourth-quarter outlook includes roughly $50 million of incremental tariff expenses. AEO is on track to introduce 22 Aerie and 26 Offline stores. The company will complete nearly 50 AE store remodels with complete upgrades to the modern design. The recent store upgrades are the Aventura Malland Sawgrass Mills in Miami and its new SoHo location in New York City.
Based on the quarter-to-date sales trends and the important selling weeks still ahead, management has raised fourth-quarter operating income guidance to the band of $155-$160 million based on comp sales growth of 8-9% with similar growth in total revenues. It had previously guided fourth-quarter operating income of $125-$130 million on comps in the positive low single digits. BOW costs are likely to rise owing to new store growth for Aerie and Offline, and higher digital penetration. SG&A is anticipated to increase in low- mid-single digits on investments in advertising.
Based on the top-line strength, management forecasts both BOW and SG&A to leverage in the final quarter of fiscal 2025. The tax rate is likely to be roughly 28% and the weighted average share count will be approximately 173 million. The company is highly focused for the rest of the current fiscal year, delivering solid profit flow-through and sustaining the momentum into 2026.
For the fiscal year, adjusted operating income guidance rose to $303-$308 million, with comps in the low single digits compared with the earlier guidance of adjusted operating income of $255-$265 million on flat comps. Gross margin is likely to decline year over year for the fourth quarter and fiscal 2025. SG&A is anticipated to increase in low mid-single digits. The tax rate is likely to be roughly 27% and the weighted average share count will be approximately 174 million. The outlook includes roughly $70 million of incremental tariff expenses.
Eye These Solid Picks in Retail
The Gap, Inc. (GAP - Free Report) , a lifestyle specialty retailer that offers fashion apparel and accessories, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GAP's current financial-year sales indicates growth of 1.8% from the year-ago figure. GAP delivered an average earnings surprise of 19.1% in the last four quarters.
Boot Barn (BOOT - Free Report) operates as a retailer of footwear, apparel and accessories, carrying a Zacks Rank #2 (Buy) at present. BOOT delivered a trailing four-quarter earnings surprise of 5.4%, on average.
The Zacks Consensus Estimate for Boot Barn’s current fiscal-year EPS and sales indicates growth of 20.5% and 16.2%, 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 18.5%, on average.
The Zacks Consensus Estimate for BIRD’s current financial-year EPS indicates growth of 19.9% from the year-ago figure.