AEO - Earnings call transcript Q2 2025 | American Eagle Outfitters, Inc.

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Operator

Greetings, and welcome to the American Eagle Outfitters Second Quarter 2024 Earnings Conference Call. [Operator Instructions]

As a reminder, this call is being recorded. I would now like to turn the call over to Judy Meehan, Senior Vice President, Corporate Communications and Investor Relations. Thank you, Judy.

You may begin.

Judy Meehan

everyone. morning, Good

Chief for Chairman today Executive remarks Jay Mike are Director Joining Chief our Executive Executive Mathias, and Aerie and AE President, Officer. Officer; Schottenstein, for me and prepared Financial Jen Creative Foyle,

to obligation current Before we The you The to expectations year, These are risk ended the on or ended update August factors will are in I that information XX actually by for to company with statements. that the XX compared based and as based forward-looking beliefs. or results undertakes to calendar remind upon for second forward-looking XXXX today's we materially XX except discussion XX, compared certain filings. no information, events are weeks represents last future any metrics call, XX begin sales statements a today's the XXXX, X, quarter presented law. Consistent need differ make August X, the results may XXXX. revise realized otherwise, as result publicly XXXX, the weeks ended new ended our or included whether SEC comparable presented XXXX statements, of weeks and required retail July X, the week August the weeks company's XXrd

investor can turn I'll the website quarter you the Additionally, find our section. the Jay. And now call presentation corporate Investor on posted second at to Relations www.aeo-inc.com in over

Jay Schottenstein

Thanks, good everyone. Judy, morning, and

plan, brands value. on executing shareholder capabilities strategy forward continue operating continued powering our our growth. strengthening to we quarter, our second the and We're profitable During moving iconic driving

our achieving improvement revenue key quarter showed meaningful financial our of also income of record results performance majority growth. operating sixth Our were delivered second quarter proof. Consolidating the consecutive results strong metrics. while We across

first Second across consistent quarter first our results We strategic half. on a made solid multiyear our priorities progress plan. strong with quarter performance, aligned in our locking built

key optimize third, with second, our our pillars amplify first, reminder, execute a financial operations; and X discipline. As are: our brands;

quarter. comp achieved the the of revenue channels To was growth. for total record We increase a highlights quarter. $X.X billion and financial new and strategic a both X% of quarter growth start, nice for Notably posted company. the and brands on Touching X% revenue second the for

beloved We it growth with each the legacy brands expansion. defined in second own come American AE life Aerie, initiatives. AE's retail: the Eagle and execute most as map American our exciting of have comps powerful in to their I casual in And countless we leverage on for for seeing love two road quarter. X% our new ways has generations. and grew fashion

growing categories. and number market in share our momentum gaining of are focused a We

Our remodeled and new and a very lived-in outperforming store women design approximately great locations, to special has on out stores results seeing are body with the of fleet. Aerie now balance empowerment. been anchored the rolled positivity is brand, we XX

reaching brand into our record awareness with build another we X% are As and we active new apparel comps heights. and revenue result In categories, quarter, new driven the second strength expand in achieved by sub-brand. OFFLINE increasing Aerie

performing New customers. reach bringing well, and our OFFLINE stores in new are Aerie and very expanding

we also growth, operating to the business across significant growth income in key our principles areas. drove XX% as Second, profitable focus continue operating base This on new in in and submitted efficiency focus our cost with we realize line delivered delivering across year-over-year. leverage

debt. with our million $XXX we shape, Third, sheet excellent quarter cash exited with the in no in balance and

second long-term investments operations. the leveraged and our to flow brands healthy fuel cash we in During quarter,

to She'll the brand building $XXX complement are Stephanie as our year-to-date proven X to consumer second returns shareholders sector. a record brings strategist We repurchases. which excited to quarter, valuable organization. This and brings decades very cash track also lastly, returned million, in the and welcome our to our combination $XXX a our million advice with commitment we Pugliese. to brings shareholders. And value over Board, with consistent Stephanie our strong dividends of delivering new in to share outstanding strong has of through always Board the member, expertise a experience in

look to I'm customer new pleased I positive with collections. response Now the Fall forward, as

with product to formula unique outstanding position New the offered cornerstone brands, upcoming great style us for customers and experiences that at is our our great for optimistic we innovations of seasons. brands, in Across consumers. perfectly will today's combined of value, our a quality continue I'm deliver

this quarter inventory and focus same growth results core the macro remain the our At half closing, that the solid we the a for in recognize in second and locked dynamic and AEO first environment expense time, of profitable a strategy. across importance discipline will organization. In powering

to Mike of are profits end operating $XXX review, million previous high of track we will million $XXX the at our deliver outlook. on As to

Looking the beyond and this, plan term. we confident place the sustainable brands growth further over long have right our profit I'm to in deliver expand

drive Our focus and continued shareholder on to greater remain efficiencies yielding making steadfast progress is we value. in results,

Jen. to over Now

Jennifer Foyle

with I'm good second pleased Thanks, our morning, really performance. Jay, and everyone. quarter

customer merchandise are actively widening appeal engaging stayed brands. profitably, and files, brand our us Our further and we in with new offered inventory results. and which brands, AE trend strong Both contributed marketing. are margins Across our saw on exciting growth Aerie than double-digit and ever. we disciplined higher We of collections into chased delivering right guiding demonstrating in strategies customers to more fan their favorites the

American Eagle. start with me Let today

As that and legacy modernizing growth over of year, AE in a we've noted, customers, generations past on and journey Jay has been optimism to one exciting in individual anchored of incredible AE's new the mainstay agenda. brought is fashion style joy an casual

making X%. with of also X% AE, continues fourth with the again and led which in for for are up was amplifying once revenue Operating progress, rise the and quarter. with collections. I with this to growth the quarter Women's, steady every fact, Eagle pleased we comps rising am profit revenue profit growth momentum particularly quarter American consecutive In exciting

quarters growth. to a seen of We drive X comps continue that now has category consecutive

knits, a Skirts, shirts. shorts focus dresses is huge fashion seeing output the for tees us completing check and love I and very March, in strong. were reviewed I and As also across new

seen of growth to which very both trends casual widening social with twill great in key age strength opportunities. In tops new response were bottoms. demo, have We Men's, looks pleased we are improving in occasions a our targeting and and

Additionally, casual defined Collection traction, is XX/X active to value. by sharp our forward Activewear option to and our learnings high-quality, read great design react new and use continuing a gaining offering new trends. look to We to

on also that the and life reintroduce second fullest. the powerful of quarter, Live to inspires marketing we to individuality our to In Built optimism, legacy live Life. it's were anthem Your a generation platform, AE's every excited

quarterback features Open Trevor Our Coco Fall Champion, U.S. and campaign Lawrence. Gauff star

we to edition product Coco on We terrific our as a styles. with we a to see forward ahead. And limited this collaboration brand. denim highlight designed platform look to week, now move response Just to continue on Aerie, introduced last moving forward building to we amazing

Our into has soft incredible. expansion OFFLINE and simply with Activewear been dressing categories the

for profit The X% One categories continue another with record Aerie revenue the second be is flow-through in margins last a yet in expected And with by as to that to to marked year, we fueled swim. callout positive. were weakness quarter are increase major improving continues scale, up comps. X% expanding. Most

is which up were spring X%. a swim, comps Excluding category, Aerie seasonal

active are potential comping in in soft the Activewear delivered both In where the shared apparel love we we the double categories captured strength shorts, quarter a favorites. OFFLINE our was and growth customers hottest apparel, summer how coming tanks tried As second with market our assortment We led see sports as in reach March, here active and key and of stellar the cozy I categories two tees, be to driving most by with soft in pants in outstanding. and digits. Aerie's that years. and we tops. true strength and looks, for shorts to continues bras, came

to and as back-to-school, positive strongholds leggings. categories, including customer we a fleece response transition we like newness well sleepwear seeing As to and very are as

Aerie Get With a power exposure Real. up strategy And are We July, launched what been expand date. the TikTokers them the prominent the success to Me, to sharing also has ramping influencer huge and In XX real. Real featuring we campaign makes our of

time Activewear our this for to OFFLINE, are in breadth Move As build new The Want. highlighting tagline Fall, of with we around continue You unveiling marketing the buzz the focused first Way we fabrications

summary, are In well brands and our healthy, positioned. growing

well, August. which include collection I'm collaborations about collections, and delight our Fall and doing in our events upcoming pleased fun with new excited so performance to marketing customers. I'm far is Our

that We brands. to I our delivering are incredibly are making on momentum. the fantastic confident right continued the progress the we across the tremendous forward path teams again remain once to unlock across our and initiatives. strategic look see I we Thanks potential for to

And with that, turn over to the call Mike. I'll

Mike Mathias

everyone. Jen, good Thanks, and morning,

up across Powering structure to in the behind results second quarter brands are March. Growth in $X.X by work profit operating strong the Consolidated Our strong improvements to a speak Profitable year, to X% power margin and on cost driven last growth. of our comparable of sales our leading and nice P&L, was plan driving revenue increase announced leverage X% highlights. expansion. Spending the back growth few billion our Foundational to a

year, operating to healthy gross to XX.X%. quarter, $XXX last of margins $XXX favorable the The rose a were last X.X%. Gross was a $XX million the to reflecting the week. Operating expanded million, includes points product calendar million of of rose points contributed retail calendar selling contribution by to $XX of capture related XX to XX% rate shift led margin approximately volume a up The higher in the costs. basis dollars basis million profit discussed approximately XXX shift. last revenue, XX%. year. margin Merchandise to and income As Back-To-School increasing This

making discipline, by expense XX digital a X% guidance. Additionally, and points, driving focus corporate We're of leveraging order. SG&A the leveraging year, leverage we we I'm BOW down consistent how our as basis and over we maintenance with services, XX last how we by to also and year. Depreciation SG&A where key and year-over-year, by operate driven fees track of $XXX and on compensation, million points. incentive strict declined driven was XX across day challenging delivery store the rent payroll. sales rate levered. teams efficiencies cost leverage balance points, maintained was and the up saw are including per work basis lower to of and pleased across progress every cost cost remain SG&A supplies Professional basis the with areas.

tax second rate XX% in with The guidance. quarter was line

the for the XXs the remainder mid-to-high tax year. rate continue in expect be We to the to of

year. last rising to quarter was up continued remain buying Consolidated and Earnings per X% chase. Inventory was share ending the costs discipline as for year-over-year. we share, brands healthy inventory across per to $X.XX maintained XX% levels second

allowing As noted, flow, cash to well shareholders. as return to generated we our fuel Jay investments in healthy us as cash business

quarter $XX million million in $XX totaled CapEx quarter year-to-date. Second the and

the year million to $XXX to expect We range of $XXX in continue to full be spend million.

shares and the we out over million dividend, X.X liquidity, sheet $XXX million, to our shares paying million a with $XX and million. We quarterly repurchases cash million repurchased $XXX million the $XXX our bringing to of to addition share approximately balance In amounting in total revolver. strong ended X year-to-date with including quarter quarter, in

demonstration quarter to while results our flow-through. our our ingrained our move fueling operating This are to to new results creating organization good Second forward, outlook. of is deliver as growth a our shareholder ability driving improve discipline profit under efficiencies across value, continue we which our brands me strategy, in business strong now leads

For into third the in that retail from the the $XXX of operating third the be shifted to to of expect we reflects $XXX approximately income This due quarter range calendar. $XX million. the million million quarter, second quarter to profit

reflecting revenue sales out to as retail quarter flat with the comparable million third calendar to in of $XX range grow previously revenue expect slightly, shifting due X%, X% of to the discussed. up We to

income full to our XX% end of high to $XXX income at operating the income last year. XX% $XXX million, adjusted guidance. of outlook our million reflects $XXX growth operating we prior This the updated For have of million year, to to

the expenses bulk of second one expect other as X%, of profit the for of up fourth as year, benefit the incentive coming remain to with on previously track comparable selling the improvement well revenue SG&A of initiatives. We quarter discussed. We half the including week with range less leverage as X%, X% growth to timing sales the to of ongoing approximately and in impact due in the

be is D&A $XXX XXXs. expected count for slightly. to our and remained share down at Third high million, in projections weighted quarter average SG&A remains the

I business. want I underscore Before confidence up our I for the in of to the open direction questions, have

we're long-term brands our our with With the and forward moving of strategy, in business our line agenda. new clarity

we'll that, with for questions. it open And up

Operator

Instructions] [Operator

Adrienne Our question Barclays. from first is Yih with

Adrienne Yih-Tennant

of thus bit progress. the between you impacts if happy early I deeper mentioned see Great. you're had little Nice and shift you Aerie sort that if versus to into of the was silhouette some can on wondering, were reads the Jen, you far. with quarter-to-date, a I Back-To-School was of kind that go Eagle, month-to-date. wondering seeing American

duration in how Labor terms then then Is second do Day? you big are last think up you slightly? change quarter? quarter. up, from that a of of the you so, And about about up after year Because having shifted the kind down If after there? And can a a what following estimate that talk like last pretty XX% September, wind Back-To-School of has for against Mike, same

Jennifer Foyle

quarter Sure. really We're delivering acceleration results. Back-To-School. excited And am the the very strategy. so on with in pleased with ahead, as our really, I about second And pleased this we're we look results.

a mainstay. As you Eagle. it's denim, know, rite passage when Jeans our are of American we for think about

of We're all for incredible denim XX-year business. for an #X and XX- to We ages. women olds have #X

the mainstay, I'm to trends are that reiterate. love emerging. on really our we we're going So women's And is Denim new particularly. leaning

anymore. are we're we're and in and about silhouettes, nimble feel leaning results are silhouettes, all QX. as lowering that so we one-fit as about days looser And we we're seeing is these We half we we're modifying leaning the think trends not of the into the to a really brand sure really we're into Women's seeing, our nice back ready making there. And QX new and we're play. that go future, just good

outside Going but what Aerie, results we're of softness it, little swim into as seeing to really we mentioned weeks of right? ahead swim. August. we into us many saw A similar in head in but Still very QX I nice

now. launched saw OFFLINE. seeing some our we're you in dressing. for nice business. course, It's I results fact, know is our that including if we in chasing done OFFLINE July, early there. We And soft right are Really categories also, growth Sleep, fantastic but amazing don't In business it, of us. on and

the category. We are not in seeing slowness athletic any

year's on fact, increase we In that last are we double going into digits category. double-digit continue lean were to high and to

Mike Mathias

low great a Adrienne, indication expense the to how taken so quarter. came SG&A, the second SG&A, we've continuing in of guidance, On that side monthly We we mid-single-digit hold, an even strengthen of in have guided to and -- we're initiatives result further. just that on here our increase in

And we're rest And then for the be that's the for consistent of the to the SG&A year, remainder previous of guidance really in down in fourth the quarter, with third the expecting down slightly leverage given. quarter, year. the we've

elongation question your the then just And of season. on the Back-To-School

into I in that We this recent especially similar have have early think where, get something -- the year. demand a September into Northeast, seen, bit. I assuming to in type you years seen is as Labor the think, similar little stretched Day period, happen and We're

Operator

JPMorgan. Our next question Matthew from with Boss is

Matthew Boss

you Jen, about actually could to file So both customer talked brands. maybe consumer acquisitions? you think double relative the I Eagle digits, speak at core new the expanding by American customer to across

to stand year you think today on as from seeing best how assortment relative customer do where progresses? new And existing is where see what So about to opportunity What are assortments you maybe the driving your you acquisition? think customer? we

Jennifer Foyle

our sure. growth If Sure. Look, we're really for amplifying Eagle. initiatives in new leaning categories we marketing about our I have into American think Eagle we're American and campaigns strategy and

We have XX/X.

existence We offering -- We're in new AEXX. reads nice categories businesses. not have were those X years. that prior getting we're from And on early

leaning into social casual. So we're

We're other lot in have right? brands. at we we doing out out what want and we best our is other. ensuring and of it -- best category. there spend We And leaning And to quality competition Quality price. the this to no time is the there. for quality a our this like quality I think best, I going we're own better highlight value. And than do that

your that, just And Can second question. I missed please please? reiterate you

Matthew Boss

to year Just customer the on you progresses opportunities acquisition new that think? the and relative within assortment as

Jennifer Foyle

And to customer grow brands, retention both us, Yes. Such growing saw important in and And they're in assortments out key customer able for brands. these we're post years, businesses. factor we keep in that it's of an us us. you not with now just really these also when 'XX. our honestly, with acquisitions, just think that as it's We dumped really both past with that

Matthew Boss

then, relative margin, in third you fourth about quarter? expansion us just quarter on second points saw help to And to expectations of gross Great. Mike, to XX the think the relative basis quarter

Mike Mathias

Matt. Yes,

we're shift managing expenses we always Nothing margin. promotions expecting in think the We I product and initial in of margin. markups with gross half, calendar, and we're the the much not in markdowns to revenue seen tied our to have. as expand of in as the margin the we leverage because have see favorability first still gross as really

just leveraging really about not shift, expenses. the So with it's revenue those

not improvement first we've like and the seen margin looking the in we're for quarter quarter. So the second

Operator

Sole question UBS. next from is Our with Jay

Jay Sole

to from tick you expecting you Mike, are on Is you the talked ago? Just maybe expecting expand on are mean other that that little XX -- I promotions more bit, out gross you environment? up? you different days margin. -- a the what a from competitive are seeing maybe is what that environment from promotional retailers, expected

Mike Mathias

Yes, it's competitive, Jay. always

it's maintain periods. length think think discounts we've when markdowns or need to I intelligently. in refined question. things a good We promotions, approach compete we manage managing We've a of how of very years consistently been the for We depth our our I the to -- disciplined now. But peak multiple just markdown. to compete

on see don't changing all seeing kind at what of now. the in right that based we're we So business

the don't general, ships year into nuances, get equalizer gross on the around. a we it's some then here great -- details that margin I to these is And want create in think of because

what basis the gave half Matt on ago. based tracking seen gross and seeing goal the -- color improvement a our longer-term minute we've year, in year So is are XX% on on we a and margin, XX% toward a improvement far to just the And that gross for goal. first we nice we're seeing towards are I total margin so full

other I it on promotions as think of well. value the so piece equation And is the

we the So a in our know equation industry. price is spot great in quality

deeper we're as other retailers, there's managing that So a promotions or even if intelligently more more equation great from aggressive point. things starting with price/value

Operator

question Group. with Telsey Dana the is next Advisory from Our Telsey

Dana Telsey

formats. seeing the terms you I in in mentioned How stores digital channel, versus stores the think digital? are new you of what you about some -- As seeing versus mean, stores had the you business, the are of traffic in channel

just The you're takes gross with and terms in also components move then margin. puts and of back expanding costs the as And cotton the the freight and the we through on year? half of what seeing costs also

Mike Mathias

Yes.

second quarter, Dana, we've saw for as both outlined, brands, we strength channels. and across So

and So good side. into quarter are that both positive peak both a the seeing stores nice strength with seeing. stores positive continue in Back-To-School with being healthy thing channels same traffic the digital the in here were or the still, quarter. and start in season on We're a August and Both we're third digital

margin takes puts Gross are and similar.

I been really that, gotten have in has finished product seeing ahead teams industry, changing of There think margin disruption some just of our dates. benefits. the flow-through but lines, we're freight handover time

So to planned. margin, with gross expenses nicely leveraging margin disruption. just gross our how any the it tracking a And comes that the in quarterly rate as down mitigated revenue the of we've improvement recent and shifts, some with year to there full issues again, we're

Operator

is Citi. Paul Lejuez question with next Our from

Paul Lejuez

thinking composition for you're little assumptions what more about each bake terms half. on just of how the in a bit in give second Maybe what also by comp quarter-to-date you're seeing you the specifics brand,

should growth back improvements we're in some And about dollar be F'XX? seeing How SG&A SG&A then the we for separately, half. thinking down

Mike Mathias

outlined. -- swim. quarter, without positive, Trends were was by mentioned plus Paul. as Thanks, second we've both Aerie Jen brands we X have brand,

we've consistent. So has here, as trend August that been entered

from second that So to AE has quarter swim. picked the result sort trend maintaining without in of and Aerie up the similar total,

here So August. quarter through happy Back-To-School see strong in that to start performance the peak of some the at the and weeks beginning here

on we're And 'XX, year. relatively those high the guide, to up are year. basically we end low the of slightly the then And going of of I are on middle rest Dollars saying maybe end we're then the for think this leverage of SG&A, plans. guide flat, the the in our

the make our for All built for 'XX item. we're expense sure So got muscles We've we've things the XXXX. the in expense lens toward got managing targets item. every line them need targets passing for managing decisions a short term making around to we're we line have every to single

year-over-year, managed have we I and we think, for be that general, X% X% or SG&A 'XX line growth what after revenue total about below now. as talked will in a of that the right rate to That's we're sight rate. growth down dollars going planned

Operator

is question next Kim TD from Our Jonna Cowen. with

Jungwon Kim

month love how talk the anything the would you during performed? quarter, how Could about you color also well. just And for comment each And on you're health, cadence as holiday saw any monthly if planning the notable the consumer there? on

Mike Mathias

see a QX, for bit. moderate So the months. July stronger were June did and May We

August, reaccelerated that's did within X% the think coming of kind comp our I quarter. to peak We're a July The off been again, the and planning middle has the might where periods holiday. data traffic guidance -- X% this things for quarter, traffic between we an that Back-To-School indicators, And selling moderate But guidance again of industry trend. kind to assumption for periods other back and bit. slow and between pre-July peak of for rest our full using the the data August periods are right of topic. down

Operator

Our JJK next with question is Research. Janet from Kloppenburg

Janet Kloppenburg

we've coming in of as a uncertain times with Jay, from we up. the have these the hearing been consumer the everyone. election a question about outlook I for forward CEOs on lot and move

denim merchandise wondering it some margin, and perhaps with was hear the normalizing side. as on the become pressure has I forward, So accelerate look your men's Aerie's not there. Jen, look AE, And but calling on swim love mean, wondering, to the stores now with the what out. And just I the and -- that me AUC we terrific. silhouettes freight seasonally maybe business are levels less there puts thoughts terrific, at wondering to about important. opportunity on great also you're about was I'd Michael, I I your go to the takes was the just also

address the maybe that look Do keep they inventory good and to you could levels really me. So improving?

Jay Schottenstein

of see of there. we -- all, well, opportunity a all first first out Janet, lot of

have American brands We great in Eagle.

have comfort In great on great one, our work American hard value proud customers. quality, the see giving very we've years and developed. we of emphasized, We the right I our to Not sub-brands. business, are way. the has the in Jen also got what all as we only our proud we're this of opportunity fits, been And in greatest growing probably I've company. Number history of we've the our Eagle

We have in way. Aerie growing the right

a We're great only Aerie, OFFLINE, started. in opportunity we're to hot just grow half country. area states. few great see business. We have Even in which is in with this the see there athletic a getting the We opportunity. with only We brand

same be We customer. brand a XX/X, have has own customer, we developed its was potential our At more great which our sophisticated within more sub-brands more mature Aerie which years is in and to which a sophisticated, better, to appealing great great a within the ago, our XX time, like is OFFLINE. AEXX,

So XX to XX customer the customer in future from only plus. that not the take the but have to we in will to the keep XX group, ability

in billion we billion we're $XX the we So from standpoint, think $X next a could today be years a business. few business, our

Janet Kloppenburg

That's really exciting.

Jay Schottenstein

it's we We excited to because to that add We're what We're opportunity. our together investment become I'm business. we about the emphasize see have to what making take, going to now, putting business. we're going to for committed going this, it. the our plans are

experience stores We we the we experience. experience. have in the malls shopping You customer, the it make the the walk and malls, stores it's they're whether the the a where they whether online seamless my can today store, put or walk believe in I'll in best best the for best-looking online as seamless between

of to the The in is My best or stores. play whether couple money fiddle in to the invested not online shopping experience, experience innovation. second years, last goal going we've to have anybody. We're

it everybody quality deserves emphasize I of put where we the the quarter-quarter. And to I I'm that Now know to -- our build business be ride looking do designers, merchants can't cannot team. pleased, we thing together. to quarter-to-quarter, I'm takes I'm put I built. goes it this the of I'm future. a committed whatever And together very have. to of world-class proud we our what very a for

Jennifer Foyle

hard to top, a one Jay. Thanks. Wow, that's

thing As Aerie. think is run exceeding are And XX top it, in quarters the of of revenue the top Aerie, I we've line. best on even profits record of the

focused a on really So business. profitable, healthy

As get half. reads back and including July, our some strong look Sleep, forward, in I the OFFLINE to we The was looking we our outstanding early as business the react new we are businesses, for reads new look, very in in QX. of mentioned.

the a #X building how OFFLINE. in is this about actually. And So bras sports and just We're innovation market business. is there. way, this young on that there think business, business share have in we cornerstone the about and owning And by our Legging

of with lots business higher-end So compete opportunity that competitors. the and grow likes to of

that very business. I'm excited about So

Men's denim.

some team particularly looks deserve the going it. because work I'm to to our signage to to the side. that business sure more like And starting too. will denim. all, the other make coming fits of in we nimbleness is turn on around, we checking going like marketing say do First I and my work that in really But bottoms are to impact amazing stores with have through. The we top we're business. are We

little deeper into QX of short Men's, we sell As tend the business. side the a to that reminder, business, a bit

long So come to read on and here lot have but deliver. more of we a legs, react, to and we're

Mike Mathias

need what been and we consistent intelligently. puts takes, we're Janet, to. We'll compete with when managing we've describing, the on margin markdowns

that rest of positive year. We are seeing up to year our over the and last of -- line for are we this margins sight initial have

spring of into We've remainder year. seeing through and as Right looking the for managing into freight sight initial into next seeing conversations we're improvements -- the disruption and of So season looks to or early year not last the and for now, And that half impact freight. some next. and got first flow then we're around line benefit. line buys there's some favorable this year that know any to early of of sight not we're decline well. I

right, here, AE the want at where felt business. of the as QX. that for about, quarter the about rest are plus look the the inventory, position. we quarter it year X% the this you're the and categories at And good feel and and great And of is It's end between plans remainder in of same we inventory our driving Aerie, we the we

Operator

America. Nardone of with next from Bank Our is Chris question

Christopher Nardone

through updated Can moving quarter? It were business planning you sales the the down year of of took range. you last guidance pieces high the relative the looks end like the for you how talk your to full

You've strong trends. about also extensively talked quarter-to-date

all So tie trying I'm together. to just it

And both quick the are plans. reconfirm on you what follow-up growth your Can net then year? openings plans Eagle Aerie store for for one store and this

Mike Mathias

guidance, year high the our the of Chris. -- Full on end sure, thing X% on range comp good about focus we're comp, through $XXX guidance, narrowed to end. Yes, approximate the really we've feel That's the million. we and -- think I with then is of sales that to the our high Narrowing for that the X% seeing $XXX kind come tied million to earnings to approximately the narrowing expense business, efficiencies year.

to sort core obviously X%, do And from a to of AE to nothing at X% then X% X% with to to business, our and X% Aerie the comp. narrowing X% X%,

line some sight just components some to components of and up. of we revenue have other tightening that those Just

to we've For still Aerie, plans, year. this of neutral XX XX total OFFLINE for AE planned to on got XX kind net closings, so Around XX-ish stores. store

great We're of some comments, quarter. the we're XX across end those XX of brand. mentioned got results into Jay stores. the opened to a is seeing those lift from in call, XX of remodels. as front, initial his seeing the a creating over remodel leading for the We've the On lift stores, Consistently which doing second that

excited heading. So is where that about

to We'll the be at end the of year. by about XX XX

-- Maybe brand, doing quarter. number to year what XXXX. quite talking third during So which excited And kind we're about accelerating of that the few next seeing exciting the that. we'll about executing those minimally could lift a we're next that the more of even in based on to more, has year, mean be

Jennifer Foyle

Yes. with results. Really pleased those

Operator

Tracker. is with from question next Marni Shapiro Our Retail

Marni Shapiro

on Congrats stores And amazing. look comments, Janet's Jen, great I the echo will quarter. the

you, So I for one you. questions couple and a have Jay, for just of

Eagle Your of quickly, and fashion some fashion Women's on your turning on is -- very tops. dresses, side especially American the

forward where curious stand look chasing guys that you pulling standpoint? I'm So does or are on you deliveries? like from What your

extensions then to example. the you pants consumer you in? the a categories. product of getting helping use are keep And like referenced trousers Is longer? I'll an some you as that new consumer Or of just

out follow up to conversation you estate environment And formats curious I Jay, new net success real real the just I'm either still these on remodeler. are having what store a are because store the then, you estate your opener now. great there or guys with right a want are about and thoughts

You've able Do been deals doing this a you want? are get you it's time. feel And the right like to long favorable now? you

Jennifer Foyle

Sure.

do bode like my response. way, Regarding does early the chase, our demand And brand. I on absolutely, for turn, it I very the by nimble. a fast this mentioned well because it in is team

we double-downing new seeing we're growth. And Women's. are able very to And where it these relatively of do excited really fast, what It's fashion. in creating about on getting we're also ton pull actually are we the items So only and capsules. in a not we're

it's collaboration, was we Coco to and the Gauff on to focus So well, them mean business. What are it, like starting is new the bimonthly them pull I the and customer. deliver really bringing a and they're that you're we business, see chase. resonating to they and concept. think to capsules curate it's but -- I'm just something in in whether a right and do random together And not ideas not

are i.e., certainly of ideas, mentioned. as both. it's As thinking I some think trousers, as I these tactics brands around, new customers file growth begun. new but and our there. We're getting and we only customer in just we've with sticking digital have then Certainly, Double-digit new which scratching we they are far to of categories both the the board surface on our bulletin only the new side, on world is

more to come. Jay? lot So a

Jay Schottenstein

now exciting have to opportunities products. them of freshness in stores lot mall of developers are there'll out be I the we're AE, lot Aerie able Everybody Right XX% wants because a and go combination Between fresh very the mall. And things. we of [indiscernible], now, healthy some offer a like the malls. to and think with there we have a of OFFLINE, our [indiscernible]

very a fresh design, as Our design, store new goes [indiscernible] is far very as sharp-looking design.

I think all want that mall will the developers one.

Our altogether. standby stores Aerie, are great stores, we OFFLINE put American Eagle,

potential developing exciting and in us sub-brands, our categories expanding us a certain developer stores keeps the it of to with people the of and offer relevant within one makes have we important and certain to mall. developers the So of things the lot now

Marni Shapiro

guys able of a some you just take of if success such these stores you're so you've remodel. had remodels, lieu other with the it it new and curious into in full put of I'm -- to parts

Jay Schottenstein

do location package to We developers only want is perfect the we best-looking it's want time with store the to in the it. -- have the we leases prime when different could have with prime not come because soon. to like the a the mall, We do up, do go we store

we wait to So put size in certain that sometimes store have little could three together. order we bit a get to all a

day So we're these a patient and staff they time, that just all opportunities. that's but at working have do dedicated this same is the to that's on all we way

Mike Mathias

And Marni, do formats. we have multiple

design different, new options. we this -- there's So different is have

lease with and a terms in in $XX can a gives go centers, lease for certain we're remodel, it if full which Signing be be we or AE foot. going go we where centers some So do know longer version, a long $XXX we which centers are keep favorable. time, with flexible advantages us into to could our $XX, a terms up foot -- in a these $XXX,

have multiple do option and touches we costs, full rebuilds. at lighter different the full to do do guts versions versus So

Jennifer Foyle

-- reiterate roll to the escalator. we We're average. just this a going out. results off mentioned store have come definitely in to love mentioned we And when it, you briefly design, great Tysons, side-by-side right, the location, And Aerie the here. Marni, but the it, I new It's definitely outperforming

exciting there'll team really through more come. and design. be really So The new pulled to

Operator

from Corey question next with Our Tarlowe Jefferies. is

Corey Tarlowe

Mike, on I ask SG&A. to just wanted

how buckets where do that best Within those relative stack-rank about you opportunity? to think the different the opportunities most see the framework you you've how one outlined, And another? to

Mike Mathias

SG&A now, been for We've across distribution SG&A, the this advertising, line little about, and of in we services rents, a in store as our related talking P&L, so I just year lines, labor, purchase, the focus compensation but XX% expenses, about maintenance. not Corey. Thanks, items compensation on specifically, expenses a about In think well, core over margin and gross costs. costs delivery corporate are talked

expenses So we in key the those continue focus quarter. We're saw managing to those the be leverage where areas, tightly. is the second

not be set the those to ourselves key managing teams are to So that well. on focused we next to as this the the out but year the buckets for and targets continue X just years

Judy Meehan

Okay.

one I for think question time have in we more queue.

Operator

comes Straton Our final Morgan Alex Stanley. question from with

Alexandra Straton

understood feels on step big Aerie reflective Just a tightening Can on. bigger bit couple here. I lowering to follow quarter quick worst One, you're and back-half is a operating even to the AE like of the though somewhere. I third like income up It just quarter one It cadence. you the or just improvement. a me on want guidance, a revenue down of year little it's sounds just for to that? And make not wanted sure a full fourth then then a just I bit up that, elaborate outlook,

the So drivers just I there? understand to wanted

Mike Mathias

it's seeing do tightening seeing to we're is line our a X% across Sure, nothing accurate business about of what Alex. to in the to the narrow to On other core We're full year with bit. the sight revenue parts here X% guide considers X% X% in talking moving strength to just from for our there's down to brand and -- more X% August this of comp quarter trajectory. rest revenue, from just other this X% -- components our that yes, we're

license other brands to all revenue AE other Nothing components. So core you've business. It's emerging that Aerie got with and revenue, do and some is.

the flat QX then And for the year, remainder of revenue flat we're similar and income. yes, essentially operating rate guiding

rate third last we the So a quarter about for rate, X.X% hit operating X.X% year.

and essentially flat at similar something So by revenue year shift. guiding flat we're We're income. impacted looking the this revenue

of on flat leverage expense SG&A see, the to then sort QX, quarter. equalizer based And operating is on down, we're expecting improvement the year. in the really slightly we rate great are revenue and fourth leverage, going to

range to approximately X% are at comp guiding on million to total growth. the $XXX to that X% the we revenue So year X% $XXX million

to so well. nice last our top math as toward on We be will we gets XX%. mid-X%, year to see goal as improvement improvement. call point ultimate XXX last of on X.X%. somewhere you that a nice pass a the That expansion it year's improvement will operating The basis rate around of That's

we're ourselves our So on well those up to to setting way achieve targets.

Operator

at questions are This conclude Thank you. There time. no further conference does this today's call.

your lines disconnect may your you Thank participation. for this You at time.

American Eagle Outfitters (AEO) 29 Aug 242025 Q2 Earnings call transcript