American Eagle to move away from big ad campaigns amid sluggish sales

Apparel retailer American Eagle Outfitters will move away from major celebrity ad campaigns, such as those featuring Hollywood actress Sydney Sweeney or Barcelona midfielder Lamine Yamal. The retailer is now betting on digital advertising to support sales, which fell short of Wall Street expectations last quarter. American Eagle shares have plunged almost 15% in premarket trading Thursday as of this writing.

American Eagle will move away from major ad campaigns and redirect spending toward digital advertising, company President Jen Foyle said on the earnings call for its fiscal second quarter. The celebrity partnerships were intended to build brand awareness, but the objective now is to drive consumers directly to purchases.

In its report for the fiscal second quarter, ended August 1, comparable sales increased 6% year over year. Wall Street had expected 6.7% growth, Barron’s notes. Comparable sales at the group’s Aerie brand rose 19% year over year, while the figure for the core American Eagle brand was off 1%. According to Foyle, the new marketing policy will begin delivering tangible benefits in the fourth quarter and next year.

Revenue rose 8% to $1.38 billion, versus the $1.37 billion analysts forecast. Earnings per share surged almost 76% to $0.79, 3.5 times the Wall Street consensus. However, much of the earnings growth was driven by a $196 million tariff refund, Barron’s writes. The management noted that it had collected nearly all the money it applied for, meaning this financial cushion is unlikely to recur in future quarters.

Amid continued challenges, the management reiterated American Eagle’s full-year comparable-sales forecast for the second time this year, calling for mid-single-digit growth.

American Eagle shares are down almost 15% in premarket trading Thursday. They are now off 36% year to date. Wall Street remains cautious on the stock: 12 analysts recommend “hold,” one has a “buy” call, and another rates it “sell.” The average target price is $19.20 per share, almost 14% above Wednesday’s close (before the selloff).

Over the last four quarters, American Eagle had bet on celebrity-driven brand promotion. On July 23, 2025, it launched a controversial campaign with Sweeney under the slogan “Sydney Sweeney has great jeans.” It drew criticism from those who saw racial-superiority undertones in the play on the homophones “jeans” and “genes.” But it also sent the company’s stock soaring. The jeans advertised by Sweeney sold out in just one week, helping American Eagle deliver the second-highest quarterly revenue ever.

In August 2025, the retailer signed an agreement with professional football player Travis Kelce, who is Taylor Swift’s fiancé. The high-profile campaigns helped the company deliver record sales and drove its stock up more than 20% in 2025, Barron’s wrote last year. This year, ahead of the World Cup, American Eagle announced a partnership with Yamal, a star player for Spain’s national soccer team and the club Barcelona.

Despite the splashy advertising campaigns, the retailer’s comparable sales began slowing as early as the first quarter, when they fell 2% at the American Eagle brand. “We are not satisfied with where the business performed this quarter, especially in women’s,” Foyle said at the time.

The company misallocated its assortment and lacked sufficient depth in key winning fits and silhouettes, leading to weak performance in its largest category, TD Cowen explained. In its view, this was compounded by weaker conversion, particularly in stores, product-productivity gaps, and external pressures such as cold weather.

The retailer faced the same problems in the second quarter. “American Eagle continues to struggle as our experts have pointed out a less-clear brand voice and merchandising strategies... AE falls behind the likes of Levi’s and Abercrombie,” Third Bridge analyst Patrick Ricciardi told Reuters on Wednesday.

In the current quarter, the company intends to focus on addressing growing inventories of seasonal merchandise, particularly shorts, and will direct its promotional activity toward that effort. “There is some fashion that we need to ensure that we’re clearing,” Reuters quoted Foyle as saying.

American Eagle is not the only retailer facing difficulties, Barron’s notes. Companies across the industry face mounting concerns around macroeconomic headwinds and inflation. This is prompting cautious shoppers to save money and prioritize essentials over clothing and accessories and, when they do buy apparel and accessories, to wait for discounts and promotions, Reuters writes.