American Eagle Posts Strong Q3 Results, Comparable Sales Rise 4%

Core Insights - American Eagle Outfitters, Inc. (AEO) reported strong third-quarter fiscal 2025 results, exceeding expectations for both revenue and earnings, with a year-over-year increase in both metrics [1][3][9] Financial Performance - AEO's total net revenues reached $1.36 billion, a 6% increase year over year, surpassing the Zacks Consensus Estimate of $1.32 billion [3] - Earnings per share were 53 cents, exceeding the Zacks Consensus Estimate of 43 cents, and reflecting a 10.4% increase from the previous year [1][3] - The Aerie brand saw revenues increase by 12.6% year over year to $462 million, with comparable sales rising 11% [4] - The American Eagle brand's revenues increased by 2.6% year over year to $853.7 million, with comparable sales up 1% [3][4] Margins and Expenses - Gross profit increased by 4.8% year over year to $551.9 million, with a gross margin of 40.5%, down 40 basis points from the previous year [5] - Selling, general and administrative (SG&A) expenses rose by 10% year over year to $386.3 million, representing an increase of 110 basis points as a percentage of sales [6] - Adjusted operating income was $112.6 million, down 8.9% year over year, with an operating margin of 8.3% [7] Financial Health - As of November 1, 2025, AEO had cash and cash equivalents of $112.8 million and net long-term debt of $210 million, with total shareholders' equity at $1.63 billion [8] - Inventory increased by 11% year over year to $891.2 million, reflecting higher demand and store openings [8] Future Outlook - AEO raised its fourth-quarter operating income guidance to $155-$160 million, anticipating 8-9% comparable sales growth [9][12] - The company plans to incur approximately $50 million in incremental tariff expenses in the fourth quarter [11] - AEO is set to open 22 Aerie and 26 Offline stores, along with completing nearly 50 AE store remodels [11][12] - For the fiscal year, adjusted operating income guidance has been raised to $303-$308 million, with expectations of low single-digit comparable sales growth [14]