American Eagle beat estimates and guided Q3 and Q4 above analyst estimates last night. The news sent $AEO shares up 20% in after-hours trading. At about $17, shares of AEO are now over 60% higher than where they were changing hands before the chain unleashed a slight moral panic with its Sydney Sweeney ad campaign.
AEO’s market capitalization is $1.2 billion higher than it was before “Sydney Sweeney Has Great Jeans” TV spots ran on financial television. AEO shares spiked 20% after-hours on July 23rd. Just because of the ads. Really. The earnings beat and the existence of a few ads were both worth about 20% to Wall St.
I’ve written two columns about AEO in the past two months, including “Why I Bought AEO”. I have a dog in the fight. I’m openly biased, but that doesn’t make it less accurate that American Eagle has elevated its game hugely in the last 90 days. AEO didn’t even have guidance for 2025 until last night.
I wrote a column called "Why I bought AEO". So yeah, I was relieved and happy about AEO showing second-half improvement.
I liked what AEO said on the call. I love it when comps go positive in the second half. I thought the entire management team sounded as locked in as I’ve heard them in years (which matters at AEO). I loved the energy of the CMO and the fact that AEO thought to have him on the call.
“Sydney Sweeney sells great jeans,” said CMO Craig Brahmer with scrappy, gleeful energy. “She is a winner. In six weeks, the campaign has generated unprecedented new customer acquisition. That consumer acquisition is coming from every single county in the US. The momentum is national, and it is pervasive.”
Go on with your bad self, Craig Brahmer.
AEO has a national denim tailwind. Denim drives AUR and margins at AEO. The fact that AEO has become part of the national conversation for the first time in decades, as the denim comeback hits, feels like an early holiday miracle in AEO HQ.
Adding a Travis Kelce collaboration was genius. Both Sweeney and Kelce are going to second product drops before the holidays, AEO revealed last night. Perfect. “Attractive famous people in well-produced, provocative ads” is a brilliant, retro strategy.
I worry about AEO staying in stock on core product, but that’s a high-class problem. Putting a risk of selling everything in the store too fast, at full price, is something we can shelve for later.
