American Eagle Outfitters Raises Fiscal 2025 Guidance After Stronger Third Quarter

American Eagle Outfitters (AEO) increased its outlook for the remainder of fiscal year 2025 after reporting higher revenue and earnings for the third quarter ended 1 November 2025. The apparel retailer generated total net revenue of $1.36 billion in the period, a year-over-year rise of 6%, prompting management to lift forecasts for both the current quarter and full year.

Comparable sales grew 4% across the company’s store and digital channels, though performance varied by banner. Aerie, the intimates and activewear unit, recorded an 11% gain in comparable sales, while the flagship American Eagle brand posted a 1% increase. The company also operates OFFL/NE by Aerie, Todd Snyder and Unsubscribed in the United States, Canada and Mexico.

Gross profit reached $552 million, up 5% from the same quarter a year earlier. Gross margin slipped 40 basis points to 40.5%, a decline the company attributed to roughly $20 million in net tariff costs and higher markdown activity. Partially offsetting those pressures were lower freight expenses and improved leverage on fixed costs. Expenses related to buying, occupancy and warehousing improved 20 basis points.

Operating profit rose to $113 million, compared with $106 million in the prior-year period. Other income totaled $14 million, including an unrealized investment gain of approximately $13 million that was previously disclosed. Diluted earnings per share stood at $0.53, an increase of 29% year over year, while adjusted diluted earnings per share advanced 10% on a base of 173 million diluted shares.

Inventory at quarter-end was valued at $891 million, 11% higher than a year earlier, with unit volumes up 8%. Through the first three quarters of fiscal 2025, share repurchases reached $231 million, all executed in the first half of the year. In the third quarter alone, AEO returned an additional $21 million to shareholders through its quarterly cash dividend of $0.125 per share, bringing total dividends paid so far this fiscal year to $64 million. Capital expenditures for the full year remain projected at roughly $275 million.

Based on improving sales trends, the company now expects fourth-quarter operating income of $155 million to $160 million, assuming comparable sales growth of 8% to 9%. For the full fiscal year, adjusted operating income is forecast in a range of $303 million to $308 million, up from the previous projection of $255 million to $265 million. Despite the improved earnings outlook, management anticipates a year-over-year decline in gross margin during both the fourth quarter and the full year, citing an estimated net tariff impact of about $50 million in the fourth quarter and $70 million for fiscal 2025.

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Executives reported that merchandising, marketing and operational adjustments contributed to the quarter’s positive momentum and are expected to support performance through the holiday season. The retailer’s financial statements and periodic reports are filed with the U.S. Securities and Exchange Commission, offering additional detail on strategy, risk factors and capital allocation.

Looking ahead, management reaffirmed its focus on disciplined inventory management, cost control and shareholder returns while navigating anticipated tariff headwinds. The company said it will continue to monitor consumer demand, freight markets and promotional activity as it approaches the close of fiscal 2025.

Crédito da imagem: Retail Insight Network