Holiday expectations improve
American Eagle has raised its full-year guidance and issued confident holiday forecasts after reporting quarterly results that exceeded Wall Street expectations. The retailer now anticipates comparable sales to grow 8% to 9% in the fourth quarter, significantly above the roughly 2% growth analysts had forecast.
The company expects adjusted operating income for the fiscal year to range between $303 million and $308 million, an upward revision from the previous estimate of $255 million to $265 million.
Stronger-than-expected quarterly performance
Investors reacted positively, sending shares up as much as 15% in after-hours trading on Tuesday. The apparel retailer surpassed forecasts on both revenue and net income:
Results vs. expectations:
- Earnings per share: 53 cents vs. 44 cents expected
- Revenue: $1.36 billion vs. $1.32 billion expected
Net income increased to $91.34 million, compared with $80.02 million a year ago, while overall revenue grew around 6% year-over-year.
Aerie leads performance gains
Comparable sales across the company rose 4%, topping projections, driven mostly by the Aerie brand, which posted an 11% increase in comparable sales and a revenue rise of roughly 13%.
Meanwhile, the main American Eagle brand saw a modest 1% gain in comparable sales, falling short of analyst expectations. The retailer acknowledged that recent high-profile marketing campaigns featuring Sydney Sweeney and Travis Kelce are boosting brand visibility and attracting customers, but their revenue impact is still developing.
Record momentum heading into holiday season
Despite marketing investments, profitability improved: operating margin reached 8.3%, ahead of the 7.5% analysts predicted. Management highlighted record Q3 revenue and said momentum continued into the fourth quarter, including a “record-breaking” Thanksgiving shopping weekend.
Retail peers such as Abercrombie & Fitch, Gap and Urban Outfitters have also reported resilient consumer spending, suggesting that despite tariff headwinds, shoppers remain willing to spend—especially when they perceive strong value. Early signs from the holiday period are positive, with the National Retail Federation noting stronger-than-expected activity during the Turkey 5 shopping stretch.
