Aerie, OFFLINE drive record quarter for AEO’s growth

Core Insights - AEO reported a total net revenue of $1.8 billion for the quarter ended January 31, 2026, marking a 10% increase year-over-year [1] - Comparable sales increased by 8%, with Aerie leading at a 23% surge and OFFLINE also showing strong double-digit growth, while the American Eagle brand saw a 2% increase [1] - The company achieved a record fourth quarter and holiday period, driven by compelling new product collections and fresh marketing campaigns [2] Financial Performance - Gross profit for Q4 FY25 was $651 million, up from $599 million a year ago, although gross margin decreased by 30 basis points to 37% [3] - Tariffs negatively impacted gross margin by $50 million during the quarter, but operational efficiencies and favorable currency movements helped mitigate these pressures [3] - Selling, general and administrative (SG&A) expenses rose to $418 million, a 4% increase year-over-year [3] Earnings and Profitability - GAAP operating profit was $96 million, after accounting for $84 million in impairment and restructuring charges [4] - Diluted earnings per share (EPS) for Q4 FY25 were $0.50, compared to $0.54 in the previous year [4] Full Year Performance - For FY25, AEO generated total net revenue of $5.5 billion, a 3% increase from the previous year, with comparable sales advancing by 3% [5] - Gross profit for the year was $2.0 billion, down 3% from last year, with gross margin declining by 230 basis points to 36.9% due to inventory write-downs and higher markdowns [5] - GAAP operating income for the year was $226 million, translating to diluted EPS of $1.09 [5] Inventory and Outlook - The company ended the fiscal year with total inventory of $702 million, with units up 3% [6] - For FY26, AEO anticipates high single-digit comparable sales growth for the first quarter and mid-single-digit growth for the full year, along with improved gross margins [7]