American Eagle Outfitters (AEO) has raised guidance for the fourth quarter (Q4) of fiscal year 2025 (FY25) following better-than-expected Q3 results.
The company’s total net revenue for the quarter ended 1 November 2025 grew 6% year over year (YoY) to $1.36bn.
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Total comparable sales increased 4%, with performance varying across brands.
American Eagle Outfitters operates the American Eagle, Aerie, OFFL/NE by Aerie, Todd Snyder and Unsubscribed brands in the US, Canada and Mexico.
Aerie posted an 11% increase in comparable sales, while comparable sales at American Eagle were up 1%.
Gross profit grew by 5% to $552m. Gross margin slipped by 40 basis points to 40.5%, which the company attributed to a $20m net tariff impact and higher markdowns.
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By GlobalDataThese pressures were partially offset by lower freight costs and benefits from sales leverage. Buying, occupancy and warehousing expenses improved by 20 basis points.
Operating profit reached $113m, compared with $106m in the same period last year.
Other income totalled $14m, which included a previously disclosed unrealised investment gain of $13m.
Diluted earnings per share came in at $0.53, an increase of 29% YoY. Adjusted diluted earnings per share rose 10%, based on 173 million diluted shares.
Ending inventory stood at $891m, up 11%, with units increasing 8%.
Year to date, AEO has completed $231m in share repurchases, all executed in the first half of the fiscal year.
In Q3, the company returned $21m to shareholders through its $0.125 quarterly dividend, bringing total dividend payments so far this year to $64m.
Full-year capital expenditure is projected to be approximately $275m.
On the back of improving sales trends, AEO has lifted its Q4 operating income forecast to $155m–$160m, assuming comparable sales growth of 8–9%.
The company has also raised its full-year adjusted operating income outlook to $303m–$308m, up from its prior range of $255m–$265m.
Despite the improved earnings guidance, AEO expects gross margin to decline YoY in both Q4 and the full fiscal year, citing an anticipated net tariff impact of approximately $50m in Q4 and $70m for FY25.
AEO executive chairman of the board and CEO Jay Schottenstein said: “I am extremely pleased with the significant trend change across our business reflecting decisive steps taken from merchandising to marketing to operations – all having a positive impact.”
