AMERICAN EAGLE OUTFITTERS INC

Overview

For the 13 weeks ended August 2, 2025:

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Total revenue decreased 1% from $1.291 billion to $1.284 billion, with American Eagle revenue decreasing 3% year-over-year, and Aerie revenue increasing 3% year-over-year. American Eagle's comparable sales decreased 3% year-over-year, and Aerie's comparable sales increased 3% year-over-year.

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Gross profit of $500 million increased by 30 basis points year-over-year to 38.9% as a percentage of total revenue.

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Operating income increased 2% to $103 million and increased by 20 basis points to 8.0% as a percentage of total revenue, compared to $101 million last year.

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Diluted earnings per share increased to $0.45 for the 13 weeks ended August 2, 2025 compared to $0.39 for the 13 weeks ended August 3, 2024. Year-to-date, the company has completed $231 million, or 20.4 million shares, in share repurchases, which is approximately a 10% reduction in diluted shares outstanding.

The following table shows the percentage relationship to total net revenue of the listed line items included in our Consolidated Statements of Operations:

(1) Refer to "Non-GAAP Information" below for non-GAAP or adjusted financial measures.

The following table shows our consolidated store data for the 13 and 26 weeks ended August 2, 2025 and August 3, 2024:

(1)

International licensed retail stores are not included in the consolidated store data or the total gross square feet calculation.

As of August 2, 2025, we operated 829 American Eagle retail stores, consisting of 183 Aerie side-by-side locations, five locations with AE brand, Aerie brand and OFFLINE™ connected as one store, and six OFFLINE™ side-by-side locations, 325 Aerie stand-alone stores (including 43 OFFLINE™ stand-alone stores and 46 OFFLINE™ side-by-side locations), and AEO Direct. Additionally, there were 23 Todd Snyder stand-alone locations and eight Unsubscribed locations.

Comparison of the 13 weeks ended August 2, 2025 to the 13 weeks ended August 3, 2024

Total Net Revenue

Total net revenue decreased 1% for the 13 weeks ended August 2, 2025 to $1.284 billion, compared to $1.291 billion last year. Store and digital revenue both decreased 1%. Total comparable sales decreased by 1%, compared to a 4% increase last year. Traffic and units were up across brands and channels, with declines in average unit retail price.

American Eagle. The decrease in net revenue was driven by lower average unit retail price, leading to lower transaction value, partially offset by increases in traffic and transactions. American Eagle comparable sales decreased 3%.

Aerie. The increase in net revenue was driven by increased traffic and transactions across channels, as well as increased units per transaction, partially offset by lower average unit retail price. Aerie comparable sales increased 3%.

Other. The increase in net revenue was primarily attributable to higher revenue from Todd Snyder and Unsubscribed.

Gross Profit

Gross profit was flat year-over-year, with the decline in revenue offset by lower promotional activity.

During the 13 weeks ended August 2, 2025 and August 3, 2024, $2.6 million and $2.5 million, respectively of share-based payment expense were included in gross profit, representing both time and performance-based awards.

Our gross profit may not be comparable to that of other retailers, as some retailers include all costs related to their distribution network as well as design costs in cost of sales and others may exclude a portion of these costs from cost of sales, including them in a line item such as SG&A expenses. Refer to Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements included herein for a description of our accounting policy regarding cost of sales, including certain buying, occupancy and warehousing expenses.

The decrease in SG&A expense was primarily driven by lower compensation costs as a result of recent restructuring and lower incentive costs, partially offset by investments in advertising. The balance of expense categories were flat, reflecting ongoing cost management initiatives.

There was $3.9 million and $4.3 million of share-based payment expense included in SG&A expenses for the 13 weeks ended August 2, 2025 and August 3, 2024, respectively, comprised of both time and performance-based awards.

Depreciation and Amortization Expense

The increase in expense was primarily driven by new and renovated American Eagle stores.

Operating Income

The increase in operating income was primarily driven by higher gross profit and lower SG&A expenses, partially offset by increased depreciation and amortization expense, all of which are explained in detail above.

American Eagle. The decrease was primarily the result of an $11 million decrease in gross profit driven by decreased merchandise margin on the $27 million, or 3%, decline in total net revenue, partially offset by a $6 million reduction in SG&A expenses.

Aerie. The increase was primarily the result of a $12 million increase in gross profit driven by incremental merchandise margin on the $13 million, or 3% increase in total net revenue, partially offset by a $7 million increase in SG&A expenses, primarily related to investments in advertising and variable selling expenses.

General Corporate Expenses. The decrease was primarily driven by a reduction in compensation costs as a result of recent restructuring and lower incentive costs.

Interest Expense (Income), net

The increase in interest expense (income), net is primarily related to $2 million in interest expense on increased borrowings year-over-year.

Other (Income), net

Provision for Income Taxes

The provision for income taxes is based on the current estimate of the annual effective income tax rate and is adjusted as necessary for discrete quarterly events. The effective income tax rate for the 13 weeks ended August 2, 2025 was 23.4% compared to 25.4% for the 13 weeks ended August 3, 2024. The change in the effective tax rate, as compared to the prior period, is primarily due to tax audit adjustments and foreign currency adjustments.

Net Income

Net income per diluted share of $0.45 increased for the 13 weeks ended August 2, 2025, compared to $0.39 for the 13 weeks ended August 3, 2024. The increase in net income was attributable to the factors noted above. The increase in net income per diluted share was due to a reduction in diluted shares outstanding as a result of recent share repurchases.

Comparison of the 26 weeks ended August 2, 2025 to the 26 weeks ended August 3, 2024

Total Net Revenue

Total net revenue decreased 3% to $2.373 billion for the 26 weeks ended August 2, 2025, compared to $2.435 billion last year. Digital revenue decreased 1%, and store revenue decreased 3%. Total comparable sales decreased by 2%, compared to a 5% increase last year.

American Eagle. The decrease in net revenue was driven by lower average unit retail, partially offset by increased units per transaction. American Eagle comparable sales decreased 3%.

Aerie. Net revenue was flat year-over-year, with lower average unit retail price leading to lower transaction value, offset by 11 net new store openings year-over-year.

Other. The decrease in net revenue was primarily attributable to planned lower revenue from Quiet Platforms due to our change in strategy for this business.

Gross Profit

The 15% decrease in gross profit was primarily driven by a decrease of $123 million in merchandise margin year over year due to lower sales and increased promotional activity.

During the 26 weeks ended August 2, 2025 and August 3, 2024, $9.5 million and $9.1 million, respectively of share-based payment expense were included in gross profit, representing both time and performance-based awards.

Our gross profit may not be comparable to that of other retailers, as some retailers include all costs related to their distribution network as well as design costs in cost of sales and others may exclude a portion of these costs from cost of sales, including them in a line item such as SG&A expenses. Refer to Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements for a description of our accounting policy regarding cost of sales, including certain buying, occupancy and warehousing expenses.

The increase in SG&A expense was primarily related to an increase in advertising year-over-year, partially offset by lower compensation costs.

There was $17.5 million and $18.3 million of share-based payment expense included in SG&A expenses for the 26 week periods ended August 2, 2025 and August 3, 2024, respectively, comprised of both time and performance-based awards.

Impairment & Restructuring Charges

During the 26 weeks ended August 2, 2025, we recorded $17.1 million of impairment and restructuring charges. We recorded $10.4 million of impairment related to ROU assets, $4.9 million related to fixed assets, and $1.8 million of employee severance.

Depreciation and Amortization Expense

The increase in expense was primarily driven by new and renovated American Eagle stores.

Operating Income

The decrease in operating income was primarily driven by lower gross profit, and an increase in impairment and restructuring charges, all of which are explained in detail above.

American Eagle. The decrease was primarily the result of a $89 million decline in gross profit driven by lower merchandise margin on the $58 million, or 4%, decline in total net revenue and increased promotional activity. Depreciation and amortization expense also increased $5 million primarily as a result of new and renovated stores.

Aerie. The decrease was primarily the result of a $46 million decline in gross profit driven by lower merchandise margin due to increased promotional activity and product cost. Selling, general, and administrative expenses also increased $11 million year-over-year, primarily due to investments in advertising and increased store compensation cost.

Interest Expense (Income), net

The increase in interest expense (income), net during the 26 weeks ended August 2, 2025 was primarily attributable to a $3 million increase in interest expense as a result of borrowings on our Credit Facility, as well as a $3 million reduction in interest income as a result of lower cash balances.

Other (Income), net

Provision for Income Taxes

The provision for income taxes is based on the current estimate of the annual effective income tax rate and is adjusted as necessary for discrete quarterly events. The effective income tax rate for the 26 weeks ended August 2, 2025 was 23.9% compared to 22.1% for the 26 weeks ended August 3, 2024. The change in the effective tax rate, as compared to the prior period, is primarily due to share-based payments and tax audit adjustments.

Net Income

Net income per diluted share decreased to $0.07 per diluted share for the 26 weeks ended August 2, 2025, compared to $0.73 per diluted share for the 26 weeks ended August 3, 2024. The decrease in net income was attributable to the factors noted above. The reduction in net income per diluted share was partially offset by a reduction in diluted shares outstanding as a result of recent share repurchases.

Non-GAAP Information

The results of operations section above includes operating income and net income per diluted share presented on an adjusted or non-GAAP basis, which are non-GAAP financial measures. These financial measures are not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similar measures presented by other companies. Non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. We believe that this non-GAAP information is useful as an additional means for investors to evaluate our operating performance when reviewed in conjunction with our GAAP Consolidated Financial Statements and provides a higher degree of transparency. These amounts are not determined in accordance with GAAP and, therefore, should not be used exclusively in evaluating our business and operations. The table below reconciles the GAAP financial measure to the non-GAAP financial measures discussed above.

(1) Refer to Note 13, Impairment and Restructuring Charges, to the Consolidated Financial Statements included herein for additional information.

(2) The tax effect of excluded items is the difference between the tax benefit calculated on a GAAP basis and on a non-GAAP basis.

International Operations

We have agreements with multiple third-party operators to expand our brands internationally. Our international licensing partners acquire the right to sell, promote, market, and/or distribute various categories of our products in a given geographic area and to source products from us. International licensees' rights include the right to own and operate retail stores and may include rights to sell in wholesale markets, shop-in-shop concessions and operate online marketplace businesses. As of August 2, 2025, our international licensing partners operated in 365 licensed retail stores and concessions, as well as wholesale markets, online brand sites, and online marketplaces in approximately 30 countries.

As of August 2, 2025, we had 99 and 92 Company-owned stores in Canada and Mexico, respectively.