American Eagle stated Wednesday its partnership with Sydney Sweeney has been its “finest” promoting marketing campaign so far because it introduced fiscal second-quarter earnings that beat expectations.
The corporate’s splashy, but controversial, marketing campaign with the “Euphoria” star led to some criticism and blowback however the launch, coupled with a current partnership with Taylor Swift’s new fiancé Travis Kelce, has led to new buyer acquisition and constructive site visitors throughout channels.
American Eagle inventory soared greater than 20% in after-hours buying and selling Wednesday.
“The autumn season is off to a constructive begin. Fueled by stronger product choices and the success of current advertising campaigns with Sydney Sweeney and Travis Kelce, we have now seen an uptick in buyer consciousness, engagement and comparable gross sales,” CEO Jay Schottenstein stated in a information launch. “We look ahead to constructing on our progress and the continued power of our iconic manufacturers to drive increased profitability, long-term progress and shareholder worth.”
The corporate additionally re-issued its full-year steering after withdrawing it earlier this yr. It now expects comparable gross sales to be roughly flat, higher than the 0.2% decline analysts had anticipated, in keeping with StreetAccount.
It nonetheless expects gross margin to be down during the yr, but it surely made key modifications to its outlook for working earnings, which is bearing the brunt of the tariff influence. The corporate is now anticipating its full-year working earnings to be between $255 million and $265 million, down from a earlier vary of between $360 million and $375 million.
This is how American Eagle carried out through the quarter in contrast with what Wall Avenue was anticipating, primarily based on a survey of analysts by LSEG:
- Earnings per share: 45 cents vs. 21 cents anticipated
- Income: $1.28 billion vs. $1.24 billion anticipated
The corporate’s reported web earnings for the three-month interval that ended Aug. 2 was $77.6 million, or 45 cents per share, in contrast with $77.3 million, or 39 cents per share, a yr earlier.
Gross sales fell to $1.28 billion, down barely from $1.29 billion a yr earlier.
For the present quarter, American Eagle is anticipating comparable gross sales to be up within the low single digit vary, higher than the 0.9% uptick analysts had anticipated, in keeping with StreetAccount. It is anticipating the identical development through the fourth quarter.
To date this yr, American Eagle’s efficiency has been marred by merchandising missteps, tariffs and an unsure client that is being extra selective when spending cash on merchandise like garments and sneakers.
To show issues round, American Eagle launched its marketing campaign with Sweeney forward of the essential back-to-school procuring season, however in some methods, that additionally backfired when it incited outrage from some prospects.
The slogan American Eagle selected for the marketing campaign — “Sydney Sweeney has nice denims” — led some far-left critics to say the comment was a double entendre and a nod to eugenics. In the meantime, these on the proper celebrated the marketing campaign, main President Donald Trump to weigh in and name it the “hottest” advert round.
Extra broadly, the marketing campaign additionally confronted pushback from some who stated the advertisements have been overly sexualized and out of contact, main them to marvel what sort of client the corporate was concentrating on.
The marketing campaign launched on July 23 on the tail finish of American Eagle’s fiscal second quarter, however the firm stated it is so far been a hit, regardless of the pushback it obtained. The Sweeney marketing campaign, together with the partnership it launched with Kelce, has led to “significant enchancment within the enterprise” with comps thus far this quarter up within the mid-single digits. American Eagle stated it is gained 700,000 new prospects and that site visitors throughout channels has been “constantly constructive” all through August, regardless of some information stories indicating the opposite.
The Sweeney marketing campaign has led to denim sellouts, double-digit site visitors progress and elevated consciousness and engagement, the corporate stated. The Sydney Jacket offered out in in the future and The Sydney Jean, a customized type that donated 100% of proceeds to the Disaster Textual content Line, which offers psychological well being assist, offered out in in the future.
In the meantime, American Eagle’s launch with Kelce, the Kansas Metropolis Chiefs tight finish, the day after he introduced his engagement to the pop star, drove 3 times extra gross sales in in the future than previous collaborations did in per week, the corporate stated. Most of the gadgets, particularly ones worn by Kelce and his fellow athletes, offered out.
American Eagle’s partnerships with Sweeney and Kelce spotlight the work the retailer is doing to remain related with shoppers and reduce via the noise as spending stays delicate.
It is also going through stiff competitors from friends like Abercrombie & Fitch, Hole and Levi’s. Just lately, Hole launched its “Higher in Denim” marketing campaign that includes Katseye and Kelis’s 2003 hit “Milkshake.” In the meantime, Levi’s has had an ongoing marketing campaign that includes Beyoncé whereas Abercrombie has taken a sports activities focus and partnered with the NFL.
Compounding American Eagle’s challenges is the unsure tariff atmosphere. American Eagle has been working to cut back its reliance on China to beneath 10% this yr but it surely additionally has a heavy manufacturing presence in Vietnam and India, which have been the topic of reciprocal tariffs.
