American Eagle Outfitters Shares Drop Amid Mixed Q2 Results
Shares of American Eagle Outfitters Inc (NYSE:AEO) fell nearly 16% on Thursday following mixed second-quarter results. While consolidated sales rose by 8% to $1.38 billion and Aerie's performance was strong with a 25% revenue increase, the core American Eagle brand saw comparable sales decline by 1%. Jefferies noted that while Q2 came in at the high end of expectations, continued pressure on the main brand is affecting overall results. Merchandise margin deleveraged significantly due to markdowns at American Eagle. Inventory levels rose 14% year-over-year as a result of excess seasonal goods and older denim styles. Management expects further markdown activity in Q3 while gross margins are expected to remain flat for the quarter before improving slightly by year-end. Jefferies raised its fiscal 2027 EPS estimate, now projecting it will be 26% above consensus, but reiterated a Hold rating due to ongoing challenges at American Eagle despite strong performance from Aerie.
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