American Eagle Outfitters' Q4 2025: Navigating Contradictions in SG&A, Inventory, and Consumer Trends

These are the key contradictions discussed in American Eagle Outfitters' latest 2025 Q4 earnings call, specifically including: SG&A Leverage Expectations, Inventory Levels and Choppiness in Demands, Consumer Behavior and Market Conditions, Inventory Management and Product Strategy, and SG&A Expenses:



Decline in Revenue and Profits:
- American Eagle Outfitters experienced a mid-single-digit decline in revenue for Q1 2025, with a negative impact from the less robust consumer environment and cold weather.
- The company expects full-year revenue and operating income to be down relative to last year due to ongoing consumer uncertainty and changes in the operating landscape, including tariffs and strength in U.S. dollar.

Inventory Management and Product Availability:
- American Eagle and Aerie reported outages in key denim and activewear items, impacting first-quarter sales performance.
- The company is addressing these issues by having open-to-buy inventory and chasing demand trends to improve product availability for the remainder of the year.

Cost Management and Expense Savings:
- AEO implemented proactive measures to drive additional expense savings, including assessing all costs and capital spend, and working to further diversify the supply chain to mitigate tariff impacts.
- These actions are aimed at improving business performance and offsetting challenging external economic conditions.

Digital and Store Performance:
- Digital sales have outperformed store sales, with digital traffic being more robust than in-store traffic, particularly in warmer markets.
- This trend suggests that digital channels remain more resilient despite overall softness in sales, and the company plans to leverage digital growth potential with investments in marketing and customer engagement.