American Eagle reported record sales thanks to Sidney Sweeney. The stock soared

Shares of denim apparel maker American Eagle Outfitters soared more than 13% in morning trading on Dec. 3. Its quarterly revenue reached a record. This was thanks in part to a campaign with Hollywood actress Sidney Sweeney, which U.S. President Donald Trump called "the hottest ad ever." As a result, American Eagle raised its outlook for the fiscal year - ahead of the holidays.

Shares of American Eagle jumped more than 13% to $23.6 in morning trading on Dec. 3. Tuesday's main trading closed down 2%, with one security at $20.8. That's the highest since October 2024.

High-profile marketing campaigns featuring Sidney Sweeney and Kansas City Chiefs soccer player and Taylor Swift fiancé Travis Kelsey have helped the retailer improve sales and increase market share by more than 20 percent this year, Barron's writes.

- American Eagle's net revenue jumped 6% year-over-year to a record $1.36 billion in its fiscal third quarter ended Nov. 1, it said. That was above Wall Street's forecast - it had expected net revenue to rise 2.5% to $1.32 billion, Barron's said.

- Revenue increased due to positive dynamics of comparable sales (i.e. in the same pool of stores) by 4%, the company explains. For example, the Aerie underwear brand grew by 11% and American Eagle by 1%.

- Earnings per share (EPS) for the quarter was $0.53 while analysts were expecting $0.43.

- Margin was a relative weak spot in the report, Barron's wrote. Gross margin fell 0.4 percentage points year-on-year to 40.5%. This was impacted by higher import duties as well as marketing costs.

The record-breaking third quarter performance allowed American Eagle to raise its outlook for the full fiscal year 2025, which runs through Jan. 30. While the company previously expected its comparable sales to be flat, it now forecasts them to grow "in the low single digits," that is, up to 5%. Operating income, meanwhile, will be in the range of $303-308 million versus $255-265 million.

"We had a record Thanksgiving weekend (...) and are focused on having a successful season and sustaining our success into 2026 and beyond," the company quoted its CEO Jay Schottenstein as saying.

Since the beginning of the year quotations of American Eagle jumped by almost 25%. However, most of this growth occurred after the publication of the previous quarterly report of the companies, which showed that marketing campaigns with the participation of celebrities justified themselves, writes Barron's.

Prior to this report, American Eagle's stock was going through a rough patch, having fallen 20% from the beginning of the year to the release of the report. Investors were concerned about how the company would cope with the impact of import duties and the uncertainty of consumers, who have become more cautious about spending money on clothing and shoes, according to Barron's article.

To turn the tide, American Eagle launched a campaign with Sweeney in July. This caused the manufacturer's quotes to soar - first on the day of the launch and then after the posters praised Trump. However, there were those who saw the slogan "Sydney Sweeney has great jeans" as a reference to racial superiority and beauty standards because of the consonance of the word "jeans" and "genes".

Still, partnerships with Sweeney and Kelsey have garnered more than 44 billion impressions, Barron's writes. And a recent holiday campaign featuring TV host Martha Stewart, who has become known for her housekeeping tips, should keep the momentum going, the publication adds.

Wall Street is cautious about the company's prospects, according to MarketWatch. Eight analysts advise to hold American Eagle shares, three - to sell and only one - to buy. The average target price of $19.22 is below current quotes.