AEO Shares Surge 8.40% on Q2 Earnings Beat, Celebrity Campaigns Drive Sales Growth

American Eagle Outfitters (AEO) shares surged 2.82% intraday, reaching a peak unseen since September 2025, as the stock extended its three-day winning streak with an 8.40% cumulative gain. The rally reflects renewed investor confidence in the brand’s strategic initiatives and operational adjustments, despite ongoing challenges in its supply chain and competitive landscape.

The company’s Q2 performance underscored the success of high-impact marketing campaigns featuring cultural icons. Partnerships with actress Sydney Sweeney and Kansas City Chiefs star Travis Kelce drove significant customer engagement, with limited-edition products selling out rapidly. The Sydney Sweeney collaboration, despite polarizing public reactions, generated mid-single-digit comparable sales growth and attracted 700,000 new customers. Meanwhile, the Travis Kelce partnership—leveraging his engagement to Taylor Swift—boosted sales threefold in a single day, reinforcing AEO’s focus on leveraging celebrity influence to re-engage younger demographics.

Financially, AEO reported robust Q2 results, exceeding revenue and earnings expectations. Revenue hit $1.28 billion, outperforming forecasts by $40 million, while EPS reached 45 cents, surpassing the 21 cents projected. However, the company revised its full-year guidance downward due to tariff-related costs, citing pressure on gross margins from retaliatory tariffs in Vietnam and India. CEO Jay Schottenstein noted optimism for the fall season, with low single-digit comparable sales growth anticipated for the current quarter.

Strategic capital allocation further supported shareholder value. AEO executed a $200 million accelerated share repurchase in Q2, reducing outstanding shares by 10% year-to-date. The program, coupled with disciplined inventory management and reduced promotional spending, contributed to a 50-basis-point improvement in merchandise margins. These actions signaled management’s commitment to balancing near-term cost pressures with long-term profitability.

Competitive dynamics remain a key focus as AEO navigates a crowded market. While peers like Gap and Levi’s continue to invest in celebrity-driven campaigns, AEO’s Aerie brand outperformed its parent brand, posting 3% comparable sales growth in Q2. The company’s emphasis on merchandising improvements and inventory optimization has positioned it to adapt to shifting consumer preferences, though risks such as sustained tariff impacts and soft spending environments persist.