Shares of American Eagle soar after earnings beat, boosted by Sydney Sweeney ad

Shares of jeans maker American Eagle Outfitters soared in the first minutes of morning trading today, September 4, rising nearly 24%. The company reported its second-highest quarterly revenue ever, while profitability beat analyst forecasts. This was thanks in part to a controversial advertising campaign featuring Hollywood actress Sydney Sweeney.

Shares of American Eagle jumped in the first minutes of trading today by almost 24% to $16.85 apiece. A day earlier, reporting its quarterly results, the company said the Sweeney campaign has been its “best” ever and has led to new customer acquisition and positive traffic across channels, CNBC reported.

Revenue fell 1% year over year to $1.28 billion, but that marked, as CEO Jay Schottenstein noted, the second-best quarterly result in the company’s history. It was also 3% above Wall Street expectations of $1.24 billion.

Operating profit rose 2% to $103 million, "exceeding expectations," the company said.

American Eagle reissued its full-year guidance, which it had withdrawn in May following disappointing results and amid a difficult operating environment. It now expects comparable sales to be roughly flat for the year, better than Wall Street’s projected 0.2% decline, CNBC noted. Operating income is guided at $255-265 million, versus the previous estimate of $360-375 million.

“The fall season is off to a positive start. Fueled by stronger product offerings and the success of recent marketing campaigns with Sydney Sweeney and Travis Kelce, we have seen an uptick in customer awareness, engagement and comparable sales,” Schottenstein said in the press release.

So far this year, American Eagle’s performance has been marred by merchandising missteps, tariffs, and an uncertain consumer who has being more selective when spending money on products like clothes and shoes, CNBC recalls. 

To turn things around, American Eagle launched its campaign with Sweeney in July, ahead of the crucial back-to-school shopping season. The launch sent the the stock higher, with shares rallying on the first day and again after the campaign drew praise from U.S. President Trump. The slogan American Eagle chose for the campaign – “Sydney Sweeney has great jeans” – led some critics to say the remark was a double entendre and a nod to eugenics. 

The Sweeney campaign, along with the partnership with Kelce, has led to “meaningful improvement in the business,” American Eagle says. It reports gaining 700,000 new customers and that traffic across channels was “consistently positive” throughout August. The Sydney Jacket sold out in one day and The Sydney Jean sold out in one day, the company says. Meanwhile, the day after Kelce announced his engagement to pop star Taylor Swift drove three times more sales in one day than past collaborations did in a week.

Since the start of the year, American Eagle shares are down more than 18%.

Most Wall Street analysts remain cautious, MarketWatch data shows. The stock has seven "hold" ratings, three "sell" and only two "buy."

On August 25, analysts with BofA Securities downgraded American Eagle to "underperform" from "neutral," saying it is a “tough time for a turnaround” despite the recent gains. The bank cut its target price to $10 per share from $11 per share. The impact of U.S. tariffs is so severe that the campaign featuring Sweeney is unlikely to offset the pressure.

The AI translation of this story was reviewed by a human editor.