— American Eagle’s stock jumped 25% in late trading after the retailer said tie-ups with actress Sydney Sweeney and athlete Travis Kelce have driven renewed customer interest and stronger-than-expected sales momentum, even as May–July revenues dipped 1%.
Key takeaways
- Shares rose about 25% after the company cited viral ad campaigns as a sales driver.
- Sales fell 1% in the May–July quarter, following a 5% decline in the prior quarter.
- Management now expects low single-digit sales growth in coming months.
- The Sydney Sweeney “Great Jeans” ad generated heavy attention and reportedly 40 billion impressions.
- Signature Sweeney jeans sold out within a week of launch.
- American Eagle warns of roughly $70m in tariff-related costs for H2 but says negotiations and sourcing shifts have reduced the impact.
- The campaign prompted debate over messaging, which the company says refers only to denim.
Verified facts
American Eagle Outfitters (AEO Inc) reported a 1% decline in comparable sales for the May–July period and noted a 5% drop in the preceding quarter. Despite these shortfalls, executives told investors they now expect sales to rebound into the low single digits over the coming months.
The retailer attributed the improved outlook to recent marketing campaigns featuring Sydney Sweeney and Travis Kelce. Management said the jeans campaign associated with Sweeney produced extremely high reach and helped sell through the promoted product quickly.
On the company’s earnings call, CEO Jay Schottenstein described the quarter as exceeding internal expectations and said the fall season is off to a stronger start. Chief Marketing Officer Craig Brommers said the campaign was intended as a brand reset after an extended sales slump earlier in the year.
American Eagle also cautioned investors that tariffs could add roughly $70m in costs during the second half of its fiscal year. Executives said negotiations with suppliers and shifts in sourcing have reduced the expected tariff hit compared with earlier estimates, and that modest price increases, while used selectively, are not the main mitigation tool.
Context & impact
The stock move reflects investor optimism that viral, celebrity-led marketing can quickly convert awareness into purchases for a fashion brand with a substantial youth audience. Selling out a signature item within a week signals strong short-term demand, which can help inventories and margins if sustained.
However, the underlying trend shows volatility: year-to-date performance included consecutive quarters of sales decline before the recent uptick. Sustained recovery will depend on broader consumer spending and how the retailer manages margin pressures from tariffs and input costs.
Operationally, the company faces two near-term priorities: converting campaign momentum into repeat business and containing supply-chain cost increases. The roughly $70m tariff estimate, while lower than earlier projections, still represents a material headwind for a mid-sized apparel retailer.
- Near-term: continued promotional activity and product drops tied to celebrity partners.
- Medium-term: monitor comparable-store sales and margin recovery across categories including denim and intimates.
“Fuelled by stronger product offerings and the success of recent marketing campaigns… we have seen an uptick in customer awareness, engagement and comparable sales.”
Jay Schottenstein, CEO
Unconfirmed
- Exact measurement methods behind the company’s reported “40 billion impressions” have not been independently verified in public filings.
- Any long-term change in customer behaviour resulting from the campaign remains to be proven over multiple quarters.
Bottom line
American Eagle’s rally shows how high-profile marketing collaborations can reverse near-term sales momentum for consumer brands, but the company still faces structural challenges from prior sales weakness and tariff costs. Investors will watch upcoming quarters to see if the spike in demand leads to sustainable growth.