American Eagle Outfitters, Inc. Q2 FY2025 earnings call

• Jay Schottenstein acknowledged the team's hard work and conviction in long-term plans; total revenue was strong, with Aerie showing comp growth and American Eagle improving in key categories.
• Jen Foyle discussed Aerie's rebound with 3% comp growth and focus on categories like intimates, soft dressing; American Eagle saw improvement in key go-forward categories, with back-to-school arrivals well received and partnerships with The Summer I Turned Pretty and celebrity campaigns.
• Mike Mathias mentioned consolidated revenue decline 1%, but operating income improved 2% to $103 million; SG&A down 1%; capital allocations focused on growth and returning cash to shareholders; completed $200 million accelerated repurchase program.

Total revenue for the second quarter was $1.28 billion, the second highest ever posted for the second quarter. Aerie saw a dramatic turn from the first quarter, delivering comp growth of 3% and achieving record second quarter revenue. American Eagle saw improvement in key go-forward categories. Gross profit dollars were $500 million, reflecting a gross margin of 38.9% compared to 38.6% last year.

• Third quarter: comparable sales expected to be low single-digit increase; operating income in range of $95 million to $100 million including approximately $20 million of incremental tariff costs.
• Fourth quarter: comparable sales expected to be low single-digit increase; operating profit in range of $125 million to $130 million including approximately $40 million to $50 million of tariff impact.

• Impact of tariffs, with inventory cost increase primarily due to tariffs; potential customer resistance to pricing increases; need to manage through evolving trade dynamics affecting supply chain and costs.

Q: Can you tell us more about how you keep the momentum going with new customers attracted by the Sydney Sweeney and Travis Kelce campaigns and what those consumers shop?

A: Craig Brommers stated the Sydney Sweeney campaign generated unprecedented new customer acquisition, and consumers are buying across categories including jeans, tops; Jennifer Foyle added Aerie's intimates and men's categories are seeing acceleration.

Q: Can you give more on comp metrics like AUR and UPT, and tariff numbers?

A: Mike Mathias said AUR was down mid-single digits in Q2, tariffs expected to have $20 million impact in Q3 and $40-$50 million in Q4; mitigation strategies include rebalancing country of origin, cost negotiations, etc.

Q: Any product category not working at Aerie? Thoughts on intimates sustaining comps and denim ticket prices?

A: Jennifer Foyle said shorts were a challenge but others like intimates and men's tops are improving; denim has key price points balanced; intimates is ~1/3 of Aerie's sales and expected to sustain growth.

Q: Duration of Sydney Sweeney and Travis Kelce campaigns and marketing spend?

A: Craig Brommers said Sydney Sweeney campaign continues through rest of year with new elements; Travis Kelce campaign to have second drop; Mike Mathias said advertising expense related to campaigns is heavy in Q3 with SG&A expected to have high single-digit growth in Q3 and slight decline in Q4 outside of advertising.

Q: Inventory plans for 3Q and 4Q?

A: Mike Mathias said inventory position is good; similar tariff impact dynamic expected through Q3 and Q4 with units expected to grow commensurate with sales trend.