American Eagle Outfitters, Inc. Q4 FY2025 earnings call

Brand Highlights - Aerie: Strong acceleration in demand with 23% comp growth in fourth quarter, broad-based across categories, offline activewear had double-digit growth, new collections and category expansions kept customers engaged, new Aerie customers up double digits, brand awareness at record high. - American Eagle: 2% comp growth in fourth quarter, men's business improved for three consecutive quarters, women's comp flat but with strength in jeans and tops, product initiatives and partnerships contributing to growth. ### Operational Progress: Initiatives in merchandising, operations, and marketing strengthened the company, margin performance was solid, exited quarter with record brand awareness, customer acquisition up double digits, successful expansion in categories with runway for future growth.

In the fourth quarter, Aerie delivered 23% comp growth, with strong performance across categories like intimate, soft dressing, and offline activewear. American Eagle had 2% comp growth, with men's business improving and women's comp flat but showing strength in certain categories. Total revenue in the fourth quarter was $1.8 billion, up 10%, with Aerie contributing to strong growth. Full-year 2025 revenue reached $5.5 billion, up 3%, with adjusted operating income $328 million. Aerie's revenue contribution is significant due to its strong growth, and American Eagle's contribution is also notable with its comp growth and product initiatives.

First Quarter - Comp sales growth in high single digits, American Eagle comps in positive low single digits, Aerie comps in double digits. ### Full Year - Expect operating profit in range of 390 to 410 million based on consolidated comparable sales growth in mid-single digits. ### Tariff Impact - Guidance reflects incremental tariffs in 2025, primarily impacting first half, outlook doesn't incorporate recent Supreme Court decisions, expect ~80% of annual operating profit generated in second half.

Tariff Pressure - Significant net tariff pressure of approximately $50 million in fourth quarter, ongoing tariff impact on margins and profitability. ### Weather Impact - Weather disruptions like storms in February affecting AE comp, as storm base has concentration in northeast area.

Q: Gross margin and markdowns?

A: Gross margin expected mid to high 30% in first quarter, lower in second, expand in back half. Markdowns well controlled mostly, bottoms in jeans business promoted deeper in AE, Aerie AUR up with controlled markdowns.

Q: Store openings and Middle East business?

A: 35 - 40 area and offline store openings, ~25 - 30 AE store closings. Middle East stores mostly open after disruption, Israel stores closed, impact minimal.

Q: Aerie comp inflection and AE expense?

A: Aerie saw momentum with all categories working, newness and categories contributing. SG&A has intentional increase in advertising spend, driving first half up, back half expecting to leverage expense based on comp.

Q: American Eagle brand opportunities and Intimates?

A: American Eagle opportunities in fleet rationalization, product innovation, direct business. Intimates saw great success in Q4, leveraging undies to get new customers, launching new bras and silhouettes.

Q: Advertising and store refreshes?

A: Leveraging talent and community for advertising, seeing momentum. ~60 store refreshes planned, seeing payback with above chain average comps.

Q: Tariffs and quiet logistics?

A: No specific tariff pass-through intent, quiet logistics savings not reinvested specifically, used for advertising.

Q: AE comp and Aerie comp breakdown?

A: AE comp low single digit due to weather disruptions, Aerie comp 23% with all categories working, new customer growth and brand awareness increase contributing.