Financial Data and Key Metrics Changes - Total revenue for Q4 2025 reached an all-time high of $1.8 billion, increasing by 10% compared to the previous year [8][19] - Overall comparable sales grew by 8%, with Aerie up 23% and American Eagle up 2% [19][20] - Adjusted operating income was $180 million, up 27% from $142 million last year, with an adjusted operating margin of 10.2%, increasing from 8.9% [8][22] - Full year 2025 annual revenue reached a record $5.5 billion, up 3% from last year, with adjusted operating income of $328 million [9] Business Line Data and Key Metrics Changes - Aerie experienced a remarkable 23% comparable sales growth, driven by strong demand across categories including intimates and activewear [7][12] - American Eagle's comparable sales grew by 2%, with positive results in men's and women's tops, and jeans [16][17] - OFFLINE brand also showed significant growth, particularly in active bottoms and sports bras, indicating strong customer engagement [14][15] Market Data and Key Metrics Changes - Customer acquisition increased in double digits, with brand awareness rising by 12% year-over-year for Aerie [7][15] - The company reported robust demand across various categories and channels, indicating a strong market position [7][19] Company Strategy and Development Direction - The company is focused on driving enduring profitable growth and strong cash flow for shareholders, with a commitment to operational improvements and strategic marketing initiatives [5][9] - A decision was made to exit Quiet Logistics to concentrate on core brands, enhancing logistics functions and regional distribution capabilities [10][19] - The company plans to open 35-40 new Aerie and OFFLINE stores while closing 25-30 lower productivity American Eagle stores [40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and ability to build on positive sales trends as they enter 2026 [10][24] - The first quarter of 2026 is off to a good start, with positive comparable sales across brands, particularly at Aerie and OFFLINE [24][26] - Management acknowledged challenges from tariffs but indicated that operational efficiencies and cost management would help mitigate these impacts [20][24] Other Important Information - The company ended 2025 with nearly $240 million in cash and no debt, maintaining a strong financial position [9][22] - Capital expenditures for 2025 totaled over $260 million, with expectations for similar levels in 2026 [23][24] Q&A Session Summary Question: Can you talk about gross margin expectations and markdowns? - Management expects gross margin in the mid-to-high 30% range for Q1, with potential expansion in the second half of the year [30][31] - Higher markdowns were noted in the American Eagle brand, particularly in jeans, while Aerie managed to reduce promotions [32][33] Question: How are you thinking about store openings this year? - The company plans 35-40 openings for Aerie and OFFLINE, while closing 25-30 lower productivity American Eagle stores [40][41] Question: Can you provide an update on the Middle East business? - The Middle East operations are experiencing some disruption, but stores are mostly open, with minimal EBITDA impact expected [42][43] Question: What is the impact of Quiet Logistics on EBITDA? - The exit from Quiet Logistics is expected to provide annual savings of about $20 million, with some benefits anticipated in 2026 [43][44] Question: How do you see the intimate business performance evolving? - The intimates category is expected to grow, leveraging new products and bundling strategies to attract customers [67]

Group 1 - Actress Sydney Sweeney rang the opening bell at the New York Stock Exchange (NYSE) alongside American Eagle Outfitters Chairman and CEO Jay Schottenstein, marking a significant promotional event for the retailer [1] - Sweeney's partnership with American Eagle in 2025 for an advertising campaign has generated considerable online attention and controversy, particularly due to its wordplay that some critics argue blurs the line between fashion marketing and genetic traits [2][3] - The campaign slogan "Sydney Sweeney Has Great Jeans" was released last summer, and Sweeney's appearance at the NYSE included wearing jeans and a light blue denim jacket, reinforcing the campaign's theme [3] Group 2 - American Eagle's sales have reportedly surged as a result of the campaign, with President Donald Trump publicly defending Sweeney and promoting the ad, stating that the jeans are "flying off the shelves" [5] - In response to the backlash, American Eagle emphasized that the ad was focused on the jeans, stating, "Her jeans. Her story," and reaffirming their commitment to celebrating individual confidence in wearing their products [5][7]