Celebrity Power Drives American Eagle's Earnings Beat
American Eagle Outfitters delivered a stronger-than-expected second quarter for fiscal 2025, reporting earnings of 45 cents per share, up 15% year-over-year and well ahead of the roughly 20 cents analysts had penciled in. Shares jumped more than 20% in after-hours trading following the September 3 earnings release, one of the retailer's sharpest single-day moves in years. Executive Chairman and CEO Jay Schottenstein credited the rebound to "the success of recent marketing campaigns with Sydney Sweeney and Travis Kelce," which he said had lifted customer awareness, engagement and comparable sales heading into the fall season.
Net revenue came in at $1.28 billion for the quarter ended August 2, down 1% from a year earlier but still the second-highest second-quarter revenue in the company's history and ahead of Wall Street's roughly $1.24 billion estimate. Chief Marketing Officer Craig Brommers said the celebrity partnerships had driven "unprecedented new customer acquisition" in a matter of weeks, a claim the company later backed up with harder numbers on the earnings call.
Sydney Sweeney's "Great Jeans" Campaign Ignites Backlash — and Sales
The "Great Jeans" campaign featuring Sydney Sweeney launched in late July and immediately sparked intense cultural debate, with critics arguing its "great jeans/great genes" wordplay leaned on exclusionary beauty standards. American Eagle stood by the ad, saying on Instagram that it "is and always was about the jeans," and Schottenstein later called it the company's "best" advertising campaign to date.
Whatever the reputational risk, the numbers were hard to ignore. Sweeney's signature jeans sold out within about a week of launch, and executives said the campaign generated a reported 40 billion impressions across social platforms — figures cited repeatedly on the earnings call rather than independently audited, so they should be read as company-reported metrics. President and Executive Creative Director Jennifer Foyle described the campaign as a "brand and business reset" for the company, and American Eagle said the Sweeney and Kelce efforts together helped bring in an estimated 700,000 new customers during the quarter.
Travis Kelce Deal Extends the Momentum Into Menswear
American Eagle followed with the Travis Kelce collaboration launch on August 27, timed one day after the NFL star's engagement to Taylor Swift became public and just ahead of the new NFL season. The line, tied to Kelce's Tru Kolors brand, was aimed squarely at reviving the men's business, and the company said it helped drive its best Labor Day weekend on record. Brommers said on the earnings call that the Kelce partnership is "just getting going," with a second product drop planned to coincide with peak NFL-season shopping.
Behind the Numbers: A Mixed Quarter With Bright Spots
The headline revenue decline masks a more uneven picture across American Eagle's two main brands. Total comparable sales fell 1% company-wide, but that blended two very different trends: comparable sales at the flagship American Eagle brand actually declined 3%, while sister brand Aerie grew comparable sales 3%, posting record second-quarter revenue of about $429 million, up from roughly $416 million a year earlier. Gross profit rose to $500 million, with gross margin expanding 30 basis points to 38.9% and merchandise margins up 50 basis points on lower markdowns. Operating income increased 2% to $103 million.
Because the Sweeney and Kelce campaigns launched only in the final weeks of the quarter, most of their sales impact — if it materializes — is expected to show up in the third-quarter results rather than the period just reported.
Wall Street's Reaction
Investors responded favorably to the report, with shares jumping 25% in extended trading sessions after the numbers came out — a separate move from an earlier August spike tied to political commentary on the Sweeney ad (see below). Coverage of the after-hours move varied somewhat by outlet, with figures ranging from roughly 20% to just over 30%, reflecting differences in the exact timestamp and trading session used for the comparison. Either way, the reaction marked one of the stronger single-day gains among apparel retailers this year and came alongside management reissuing full-year guidance it had withdrawn earlier in 2025, now calling for comparable sales to land close to flat for the year.
Political Spotlight: Trump Weighs In
The Sweeney campaign became a political talking point well before the earnings report. In a Truth Social endorsement, praising American Eagle's approach to marketing and brand positioning, President Donald Trump wrote on August 4 that "Sydney Sweeney, a registered Republican, has the 'HOTTEST' ad out there," adding "Go get 'em, Sydney!" after Sweeney's voter registration became a talking point online. American Eagle shares moved higher in the days around that post — reports put the gain at roughly 16% to 23% depending on the trading session measured — though that August move is distinct from the larger after-hours jump tied to the September 3 earnings release described above. The episode illustrates how thoroughly the campaign had spread beyond retail marketing into wider political and cultural commentary.
Not Everyone Is Convinced the Bump Will Last
Despite the strong quarter, American Eagle itself has been cautious about reading too much into the celebrity campaigns' staying power. The company said in early September that there wasn't a "high likelihood" the Sweeney campaign could "inflect the business over the long run". Retail analysts have echoed that caution, noting that celebrity-driven sales spikes often fade once the novelty wears off unless they're backed by sustained product and brand investment — a test American Eagle will face over the next several quarters as it tries to convert first-time buyers into repeat customers.
Tariffs and the Holiday Season Ahead
American Eagle enters the back half of the year facing a real cost headwind. On the earnings call, the company guided to roughly $70 million in tariff-related pressure on gross margin in the second half of fiscal 2025 — about $20 million in the third quarter and $40 million to $50 million in the fourth — after cost-mitigation efforts, versus an unmitigated impact management pegged closer to $180 million. The company also plans to close 35 to 40 American Eagle stores by year-end as part of an ongoing fleet review, even as it continues opening new Aerie locations. Management guided to low-single-digit comparable sales growth for both the third and fourth quarters, betting that continued marketing momentum from Sweeney and Kelce can offset tighter consumer spending and tariff-driven cost pressure through the holiday season.
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