AMERICAN EAGLE OUTFITTERS INC

Overview

For the 13 weeks ended November 1, 2025:

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Total revenue increased 6% from $1.289 billion to $1.363 billion, with American Eagle revenue increasing 3% year-over-year, and Aerie revenue increasing 12% year-over-year. American Eagle's comparable sales increased 1% year-over-year, and Aerie's comparable sales increased 11% year-over-year.

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Gross profit of $552 million increased 5% year-over-year.

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Operating income increased 6% to $113 million and increased 10 basis points to 8.3% as a percentage of total revenue, compared to $106 million last year. Operating income decreased 9% compared to adjusted operating income last year of $124 million, or 9.6% as a percentage of total revenue.

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Diluted earnings per share increased to $0.53 for the 13 weeks ended November 1, 2025 compared to $0.41 for the 13 weeks ended November 2, 2024. Year-to-date, the Company has completed $231 million, or 20.4 million shares, in share repurchases, which is approximately a 12% 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 39 weeks ended November 1, 2025 and November 2, 2024:

(1)

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

As of November 1, 2025, we operated 830 American Eagle retail stores, consisting of 183 Aerie side-by-side locations, six locations with AE brand, Aerie brand and OFFLINE™ connected as one store, and six OFFLINE™ side-by-side locations, 329 Aerie stand-alone stores (including 44 OFFLINE™ stand-alone stores and 47 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 November 1, 2025 to the 13 weeks ended November 2, 2024

Total Net Revenue

Total net revenue increased 6% for the 13 weeks ended November 1, 2025 to $1.363 billion, compared to $1.289 billion last year. Store revenue increased 3%, and digital revenue increased 8%. Total comparable sales increased 4%, compared to a 3% increase last year. Traffic and transactional value were up across brands and channels.

American Eagle. The increase in net revenue was driven by traffic and transaction value across channels. American Eagle comparable sales increased 1%.

Aerie. The increase in net revenue was driven by increased traffic and transaction value across channels. Aerie comparable sales increased 11%.

Other, net of intersegment eliminations. The increase in net revenue was primarily attributable to planned lower revenue from Quiet Platforms due to our change in strategy for this business.

Gross Profit

Gross profit increased 5% year-over-year, driven by an increase in merchandise margin of $31 million due to increased net revenue and lower product costs from both American Eagle and Aerie, partially offset by higher markdowns and $20 million of incremental tariffs, net of mitigation efforts. Additionally, buying, occupancy, and warehousing costs increased $11 million year-over-year, primarily due to new store openings. However, as a percentage of net revenue, buying, occupancy, and warehousing costs improved by 20 basis points, driven by higher sales.

During the 13 weeks ended November 1, 2025 and November 2, 2024, $2.4 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 increase in SG&A expense was primarily driven by planned investments in advertising.

There was $3.7 million and $3.5 million of share-based payment expense included in SG&A expenses for the 13 weeks ended November 1, 2025 and November 2, 2024, respectively, comprised of both time- and performance-based awards.

Impairment and Restructuring Charges

There were no impairment and restructuring charges recorded during the 13 weeks ended November 1, 2025.

During the 13 weeks ended November 2, 2024, we recorded $10.7 million of employee severance costs related to corporate restructuring, and $6.8 million of impairment and restructuring costs due to the pending sale of our Hong Kong retail operations.

Depreciation and Amortization Expense

Operating Income

The increase in operating income was primarily driven by higher gross profit, as well as an $18 million reduction in impairment and restructuring charges, partially offset by increased SG&A expenses, all of which are explained in detail above.

American Eagle. The decrease was primarily the result of a $6 million decrease in gross profit driven by decreased merchandise margin on the $22 million, or 3%, increase in total net revenue, due to higher markdowns and incremental net tariffs, and a $21 million increase in SG&A expenses, primarily related to planned investments in advertising.

Aerie. The increase was primarily the result of a $30 million increase in gross profit driven by incremental merchandise margin on the $52 million, or 13%, increase in total net revenue, partially offset by incremental net tariffs, and a $6 million increase in buying, occupancy, and warehousing expenses. Additionally, SG&A expenses increased $10 million, primarily due to store salaries and variable selling expenses.

Interest Expense (Income), Net

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

Other (Income), Net

The increase in other (income), net consists of a $13 million unrealized gain in equity method investments.

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 November 1, 2025 was 26.7% compared to 26.1% for the 13 weeks ended November 2, 2024. The change in the effective tax rate, as compared to the prior period, is primarily due to the international tax provisions of the Tax Act and overall geographic mix of earnings in jurisdictions with different tax rates.

Net Income

Net income per diluted share of $0.53 increased for the 13 weeks ended November 1, 2025, compared to $0.41 for the 13 weeks ended November 2, 2024. The increase in net income was attributable to the factors noted above. The increase in net income per diluted share was in part due to a reduction in diluted shares outstanding as a result of recent share repurchases.

Comparison of the 39 weeks ended November 1, 2025 to the 39 weeks ended November 2, 2024

Total Net Revenue

Total net revenue was relatively flat for the 39 weeks ended November 1, 2025, compared to last year. Digital revenue increased 2%, and store revenue decreased 1%. Total comparable sales were flat, compared to a 4% increase last year.

American Eagle. The decrease in net revenue was driven by lower average unit retail, partially offset by increased traffic and units per transaction. American Eagle comparable sales decreased 1%.

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 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 8% decrease in gross profit was primarily driven by a decrease of $99 million in merchandise margin year-over-year due to flat sales, increased promotional activity and incremental net tariffs.

During the 39 weeks ended November 1, 2025 and November 2, 2024, $12.0 million and $11.6 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 planned investments in advertising year-over-year.

There was $21.2 million and $21.8 million of share-based payment expense included in SG&A expenses for the 39-week periods ended November 1, 2025 and November 2, 2024, respectively, comprised of both time and performance-based awards.

Impairment and Restructuring Charges

During the 39 weeks ended November 1, 2025, we recorded $17.1 million of impairment and restructuring charges. We recorded $10.4 million of impairment related to ROU assets and $4.9 million related to fixed assets, primarily related to closing two fulfillment centers as part of our supply chain network optimization project, as well as $1.8 million of employee severance.

During the 39 weeks ended November 2, 2024, we recorded $10.7 million of employee severance related to corporate restructuring, and $6.8 million of impairment and restructuring costs due to the pending sale of our Hong Kong retail operations.

Depreciation and Amortization Expense

The increase in expense was primarily driven by new and renovated American Eagle stores, partially offset by a reduction in depreciation related to fulfillment centers.

Operating Income

The decrease in operating income was primarily driven by lower gross profit and higher SG&A expenses, which are explained in detail above.

American Eagle. The decrease was primarily the result of a $95 million decline in gross profit driven by lower merchandise margin on the $36 million, or 2%, decline in total net revenue, due to increased promotional activity and incremental tariffs, net of mitigation efforts. Selling, general, and administrative expenses increased $22 million primarily due to planned investments in advertising. Depreciation and amortization expense also increased $8 million primarily as a result of new and renovated stores.

Aerie. The decrease was primarily the result of a $15 million decline in gross profit driven by lower merchandise margin due to increased promotional activity and incremental tariffs, net of mitigation efforts, as well as a $6 million increase in buying, occupancy, and warehousing costs. Selling, general, and administrative expenses also increased $20 million year-over-year, primarily due to increased store compensation cost and advertising expense.

General Corporate Expenses. The decrease in expense was primarily the result of lower depreciation and amortization expense, and a reduction in corporate compensation costs due to lower incentives.

Interest Expense (Income), net

The increase in interest expense (income), net during the 39 weeks ended November 1, 2025 was primarily attributable to a $4 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 investable cash balances.

Other (Income), net

The increase in other (income), net consists of a $13 million unrealized gain on equity method investments, partially offset by foreign currency fluctuations.

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 39 weeks ended November 1, 2025 was 26.3% compared to 23.6% for the 39 weeks ended November 2, 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 $0.59 per diluted share for the 39 weeks ended November 1, 2025, compared to $1.14 per diluted share for the 39 weeks ended November 2, 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.

(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 November 1, 2025, our international licensing partners operated in 368 licensed retail stores and concessions, as well as wholesale markets, online brand sites, and online marketplaces in approximately 30 countries.

As of November 1, 2025, we had 99 and 95 Company-owned stores in Canada and Mexico, respectively.