American Eagle Outfitters (AEO) announced its first-quarter fiscal 2026 financial results, surpassing Wall Street's earnings per share estimates. However, the company's performance was marked by a significant divergence between its namesake American Eagle brand and its Aerie division. While Aerie continued its strong growth trajectory, the core American Eagle brand experienced a sales decline, even with an updated marketing campaign featuring actress Sydney Sweeney.
In the three months concluding on May 2, comparable sales for the American Eagle brand decreased by 2%. This figure fell considerably short of the 3% growth that analysts had projected, indicating a challenging period for the company's primary apparel line. In contrast, the Aerie brand demonstrated robust momentum, with comparable sales surging by 25%, exceeding the 19.1% anticipated by analysts. This disparity highlights Aerie's continued strength in capturing market share and consumer interest.
Net revenue for the American Eagle brand saw a 2% dip, totaling $678.4 million. Conversely, Aerie's revenue experienced a substantial increase of approximately 34%, reaching $480.83 million. On a combined basis, American Eagle Outfitters reported an 8% increase in comparable sales, which was slightly below the 8.6% expectation from analysts. This overall figure underscores the significant contribution of Aerie to the company's top-line growth, masking the struggles of the namesake brand.
Despite the mixed results, CEO Jay Schottenstein expressed confidence in the company's strategic direction. "While results at American Eagle were mixed, our teams are moving decisively to reignite the women's business and strengthen product execution and brand positioning," Schottenstein stated in a news release. He further emphasized the company's focus on operational excellence and disciplined execution to drive long-term shareholder value, acknowledging the prevailing consumer and macroeconomic uncertainties.
American Eagle's marketing efforts for the flagship brand included a new campaign with Sydney Sweeney, aiming to boost summer sales. This campaign adopted a more modest approach compared to the previous year's more provocative advertisements. However, similar to the prior campaign, this latest initiative did not translate into a significant sales uplift for the American Eagle banner. The company's strategy to leverage celebrity endorsements appears to be yielding more favorable results for Aerie than for its core brand.
Financially, American Eagle posted a net income of $23.53 million, or 14 cents per share, a notable improvement from a net loss of $64.90 million, or 36 cents per share, in the same period last year. Total sales climbed to $1.20 billion, marking a 10% increase from the $1.09 billion reported a year prior. The company reaffirmed its full-year financial guidance, anticipating mid-single digit percentage comparable sales growth and an improvement in gross margin. For the second quarter, American Eagle expects comparable sales to grow in the mid-to-high single digit percentage range, though it anticipates a decrease in gross margin compared to the previous year.
