AEO

Tractor Supply Company TSCO is likely to register an increase in the top line when it reports third-quarter 2026 results on Oct. 22, before market open. The Zacks Consensus Estimate for revenues is pegged at $3.8 billion, indicating a 2.3% jump from the year-ago figure. The bottom line of the leading rural lifestyle retailer is expected to have fallen year over year. The Zacks Consensus Estimate for earnings per share has been unchanged at 40 cents in the past 30 days, indicating a decline of around 18% from the year-ago period's figure. Tractor Supply has a negative trailing four-quarter earnings surprise of 4.6%, on average. In the last reported quarter, this Brentwood, TN-based company's earnings missed the Zacks Consensus Estimate by 2.4%. Tractor Supply's quarterly performance is likely to have benefited from demand and market share gains. The company has been gaining from demand for its core merchandise, including consumable, usable and edible products. TSCO's focus on tailoring its product offerings to rural customers' daily needs has been a key driver of its success. In addition, digital sales, supported by in-store delivery, higher traffic and improved conversion, have helped. The fiscal third-quarter results are likely to benefit from improving seasonal demand, pet business initiatives, pricing actions and investments in existing-store productivity. Improved precipitation across several geographies is likely to have extended the spring selling season and supported demand for lawn care, outdoor products and other seasonal merchandise. TSCO is also focused on strengthening its pet business through localized assortments, premium nutrition offerings, exclusive brands and enhanced digital capabilities. The expansion of Freshpet, alongside Allivet, improved subscription services and the integration of VIP Petcare are expected to have supported customer engagement and market share. Such factors, coupled with the execution of its everyday low-price strategy, are expected to have bolstered its top-line performance in the quarter under review. On its last earnings call, Tractor Supply had expected a modest sequential improvement in comparable sales during the second half, supported by ongoing business initiatives and easier year-over-year comparisons as the period progresses. Meanwhile, investments in Project Fusion remodels, store technology and existing-store productivity are expected to have enhanced the customer experience and improved returns. Our model anticipates comparable store average transaction to rise 0.4% year over year for the third quarter. However, Tractor Supply continues to witness cautious rural spending, softer discretionary demand and weaker big-ticket purchases. Additionally, higher SG&A, including depreciation and amortization costs, expenses from opening a distribution center and cost inflation, including tariffs, are likely to have been concerns. Our model indicates a 3.3% year-over-year increase in depreciation and amortization for the third quarter. Such limitations are likely to have hurt the company's bottom line in the quarter under review. Tractor Supply Company price-eps-surprise | Tractor Supply Company Quote Our proven model does not conclusively predict an earnings beat for Tractor Supply this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter. Tractor Supply has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell) at present. From a valuation perspective, Tractor Supply stock trades at a premium relative to the Retail - Miscellaneous industry. The company has a forward 12-month price-to-earnings ratio of 16.14X, above the industry's average of 14.71X. However, the stock trades below the historical benchmarks, with a five-year high of 27.91X. Image Source: Zacks Investment Research TSCO shares have lost 24.8% in the past six months compared with the industry's 15% decline. Image Source: Zacks Investment Research Here are a few companies that have the right combination of elements to post an earnings beat this time around: Kohl's Corporation KSS currently has an Earnings ESP of +460.00% and a Zacks Rank of 1. The company is likely to register a decline in the top line when it reports third-quarter fiscal 2026 numbers. The consensus mark for revenues is pegged at $3.5 billion, which indicates a decline of 1.1% from the figure reported in the year-ago quarter. You can see the complete list of today's Zacks #1 Rank stocks here. The Zacks Consensus Estimate for Kohl's quarterly loss per share of a penny compares unfavorably with earnings per share of 10 cents seen in the year-ago quarter. The consensus mark has changed to a loss of a penny in the past 30 days from earnings of a penny. KSS has a trailing four-quarter earnings surprise of 84.8%, on average. Chewy CHWY has an Earnings ESP of +6.65% and currently has a Zacks Rank of 3. CHWY is likely to register top and bottom-line growth when it reports third-quarter fiscal 2026 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.4 billion, indicating a 7.4% increase from the figure reported in the year-ago quarter. The consensus estimate for CHWY's fiscal third-quarter earnings is pegged at 38 cents a share, up 18.8% from the year-ago quarter. The consensus mark has been unchanged in the past 30 days. CHWY has delivered an earnings beat of 0.8%, on average, in the trailing four quarters. American Eagle Outfitters, Inc. AEO currently has an Earnings ESP of +1.32% and a Zacks Rank of 3. AEO is likely to register top-line growth when it reports third-quarter fiscal 2026 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.5 billion, indicating 6.8% growth from the figure reported in the year-ago quarter. The consensus estimate for AEO's third-quarter earnings is pegged at 49 cents a share, implying a 7.6% decrease from the year-earlier quarter. The consensus mark has dipped a penny in the past 30 days. AEO has delivered an earnings beat of 86.3%, on average, in the trailing four quarters. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tractor Supply Company (TSCO) : Free Stock Analysis Report Kohl's Corporation (KSS) : Free Stock Analysis Report American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report Chewy (CHWY) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

As the Q2 earnings season comes to a close, it's time to take stock of this quarter's best and worst performers in the apparel retailer industry, including American Eagle (NYSE:AEO) and its peers. Apparel sales are not driven so much by personal needs but by seasons, trends, and innovation, and over the last few decades, the category has shifted meaningfully online. Retailers that once only had brick-and-mortar stores are responding with omnichannel presences. The online shopping experience continues to improve and retail foot traffic in places like shopping malls continues to stall, so the evolution of clothing sellers marches on. The 8 apparel retailer stocks we track reported a satisfactory Q2. As a group, revenues were in line with analysts' consensus estimates while next quarter's revenue guidance was 0.7% below. Thankfully, share prices of the companies have been resilient as they are up 5.7% on average since the latest earnings results. With a heavy focus on denim, American Eagle Outfitters (NYSE:AEO) is a specialty retailer offering an assortment of apparel and accessories to young adults. American Eagle reported revenues of $1.38 billion, up 7.5% year on year. This print exceeded analysts' expectations by 0.7%. Overall, it was a very strong quarter for the company with a beat of analysts' EPS estimates. "The second quarter reflects the value of our AEO Inc. portfolio, led by the broad-based momentum of Aerie and OFFLINE, alongside encouraging progress at American Eagle. We continue to expand Aerie's reach and deepen brand awareness, leveraging authentic connections to attract new customers and fuel engagement. AE saw sequential improvement from the first quarter, including the fourth consecutive quarter of growth in men's, and we remain focused on opportunities to drive greater consistency in the women's business," commented Jay Schottenstein, Executive Chairman of the Board and Chief Executive Officer - AEO Inc. Interestingly, the stock is up 5.4% since reporting and currently trades at $17.80. Is now the time to buy American Eagle? Access our full analysis of the earnings results here, it's free. With an emphasis on skate and surf culture, Tilly's (NYSE:TLYS) is a specialty retailer that sells clothing, footwear, and accessories geared towards fashion-forward teens and young adults. Tilly's reported revenues of $163.5 million, up 8.1% year on year, outperforming analysts' expectations by 4.1%. The business had an incredible quarter with EPS guidance for next quarter exceeding analysts' expectations and a beat of analysts' EPS estimates. Tilly's achieved the biggest analyst estimate beat and highest guidance raise among its peers. The market seems happy with the results as the stock is up 22% since reporting. It currently trades at $4.65. Is now the time to buy Tilly's? Access our full analysis of the earnings results here, it's free. With store associates called "Zumiez Stash Members", Zumiez (NASDAQ:ZUMZ) is a specialty retailer of street and skate apparel, footwear, and accessories. Zumiez reported revenues of $209 million, down 2.5% year on year, falling short of analysts' expectations by 1.5%. It was a disappointing quarter as it posted revenue guidance for next quarter missing analysts' expectations significantly and EPS guidance for next quarter missing analysts' expectations significantly. As expected, the stock is down 15.7% since the results and currently trades at $14.09. Read our full analysis of Zumiez's results here. Founded as a purveyor of vintage items, Urban Outfitters (NASDAQ:URBN) now largely sells new apparel and accessories to teens and young adults seeking on-trend fashion. Urban Outfitters reported revenues of $1.66 billion, up 10.4% year on year. This print beat analysts' expectations by 0.7%. More broadly, it was a mixed quarter as it also logged gross margin in line with analysts' estimates but EPS in line with analysts' estimates. Urban Outfitters achieved the fastest revenue growth of the whole group. The stock is up 2.3% since reporting and currently trades at $84.85. Read our full, actionable report on Urban Outfitters here, it's free. Spun off from L Brands in 2020, Victoria's Secret (NYSE:VSXY) is an intimate clothing and beauty retailer that sells its own brands of lingerie, undergarments, and personal fragrances. Victoria's Secret reported revenues of $1.61 billion, up 10.4% year on year. This number lagged analysts' expectations by 0.6%. Aside from that, it was a mixed quarter as it also recorded a beat of analysts' EPS estimates but full-year EPS guidance missing analysts' expectations. Victoria's Secret delivered the highest full-year guidance raise in the group. The stock is up 5.3% since reporting and currently trades at $89.32. 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It has been about a month since the last earnings report for American Eagle Outfitters (AEO). Shares have added about 23.7% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is American Eagle due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. American Eagle posted fiscal second-quarter 2026 earnings of 79 cents per share, up 75.6% year over year and above the Zacks Consensus Estimate of 21 cents. Net revenue rose 7.5% to $1.38 billion and beat the consensus mark of $1.37 billion. The earnings beat was aided by tariff-refund benefits, while Aerie and OFFLINE momentum supported sales growth. Consolidated comparable sales increased 6%, and American Eagle showed sequential improvement from the first quarter. Aerie revenue increased 24.9% year over year to $535.8 million, while comparable sales advanced 19%. Management cited broad-based strength across channels and categories, including core apparel, intimates and activewear. OFFLINE also benefited from demand for Cloud Fleece, sports bras and bottoms. American Eagle brand revenue rose 0.7% to $805.9 million, but comparable sales declined 1%. Men's delivered its fourth consecutive quarter of positive comps. Women's fashion bottoms and newer denim fits gained traction, though the company is still rebalancing older and seasonal inventory. American Eagle's Margins Get Refund Boost Gross profit climbed 34.4% year over year to $672.1 million, while gross margin expanded 980 basis points to 48.7%. A net $179 million tariff-refund benefit in gross profit contributed 1,300 basis points to the margin expansion. Merchandise margins deleveraged 330 basis points, with Aerie improvement offset by American Eagle markdowns. Selling, general and administrative expenses increased 19.3% to $408.4 million and rose 290 basis points as a percentage of sales to 29.6%. Operating income rose 105.1% year over year to $211.4 million, while operating margin increased 730 basis points to 15.3%. The quarter included a $161 million net operating-income benefit from tariff refunds. AEO ended the quarter with $148 million in cash and cash equivalents. Total liquidity, including the revolver, was $783 million. Merchandise inventory was $817.9 million, up 13.9% year over year, while units increased 9%. Management said the higher inventory cost included the impact of incremental tariffs. The company also returned $21 million to shareholders through its quarterly cash dividend of 12.5 cents per share. For fiscal 2026, the company expects comparable sales to increase in the mid-single digits and gross margin to rise year over year. SG&A expenses are projected to grow in the low-double digits, while depreciation and amortization is expected at about $215 million. Operating income is forecast between $540 million and $550 million, inclusive of tariff-refund benefits. For the fiscal third quarter, AEO expects comparable sales growth in the mid-to-high single digits. Management sees Aerie and OFFLINE comps in the high teens to 20% range, while American Eagle is expected to be approximately flat. In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -12.5% due to these changes. Currently, American Eagle has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock has a grade of A on the value side, putting it in the top 20% for value investors. Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, American Eagle has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. American Eagle is part of the Zacks Retail - Apparel and Shoes industry. Over the past month, Urban Outfitters (URBN), a stock from the same industry, has gained 7.1%. The company reported its results for the quarter ended July 2026 more than a month ago. Urban Outfitters reported revenues of $1.66 billion in the last reported quarter, representing a year-over-year change of +10.4%. EPS of $1.72 for the same period compares with $1.58 a year ago. For the current quarter, Urban Outfitters is expected to post earnings of $1.54 per share, indicating a change of +20.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.9% over the last 30 days. The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Urban Outfitters. Also, the stock has a VGM Score of A. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

American Eagle has been treading water for the past six months, recording a small return of 3.4% while holding steady at $17.95. The stock also fell short of the S&P 500's 17.5% gain during that period. Is there a buying opportunity in American Eagle, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team's opinion, it's free. We're cautious about American Eagle. Here are three reasons why there are better opportunities than AEO, plus one stock we'd rather own. Reviewing a company's long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, American Eagle's sales grew at a sluggish 4.3% compounded annual growth rate over the last three years. This fell short of our benchmark for the consumer retail sector. A retailer's store count influences how much it can sell and how quickly revenue can grow. American Eagle listed 1,167 locations in the latest quarter and has kept its store count flat over the last two years while other consumer retail businesses have opted for growth. When a retailer keeps its store footprint steady, it usually means demand is stable and it's focusing on operational efficiency to increase profitability. Growth gives us insight into a company's long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity). American Eagle historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 7.7%, somewhat low compared to the best consumer retail companies that consistently pump out 30%+. American Eagle isn't a terrible business, but it doesn't pass our quality test. With its shares lagging the market recently, the stock trades at 10.2× forward P/E (or $17.95 per share). While this valuation is fair, the upside isn't great compared to the potential downside. We're pretty confident there are superior stocks to buy right now. Let us point you toward the Amazon and PayPal of Latin America. WHILE YOU'RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

American Eagle Outfitters, Inc. AEO delivered a solid second-quarter fiscal 2026 performance, with revenues and comparable sales increasing year over year as strong momentum at Aerie and OFFLINE helped offset softness at its core American Eagle brand. The company is investing in digital capabilities, marketing, inventory management and supply-chain initiatives to strengthen its brands, improve operating efficiency and support long-term growth.AEO's second-quarter results also reflected a significant benefit from IEEPA tariff refunds, which boosted gross and operating margins. While this benefit is largely nonrecurring, underlying business trends are improving, particularly at Aerie, where customer engagement, product momentum and brand awareness continue to expand. Management also expects sales growth and higher gross margins for fiscal 2026.Shares of American Eagle have declined 21.6% in the past three months, while the industry has also fallen 18.1%. Image Source: Zacks Investment Research American Eagle reported earnings of 79 cents per share for the second quarter, up from 45 cents in the year-ago quarter and significantly above the Zacks Consensus Estimate of 21 cents. Net revenues increased 8% year over year to $1.38 billion, while comparable sales increased 6%. Aerie remained the key growth engine, with comparable sales rising 19%, while American Eagle comps declined 1%.Profitability improved sharply, although the gains were substantially influenced by tariff refunds. Gross profit increased 34% to $672 million, while gross margin expanded 980 basis points to 48.7%. The quarter included a $179 million net tariff-refund benefit in gross profit, which contributed 1,300 basis points to gross-margin expansion. Merchandise margin, however, deleveraged 330 basis points as improvement at Aerie was more than offset by markdowns at American Eagle.Operating income increased to $211 million from $103 million a year ago, while operating margin expanded to 15.3% from 8%. A $161 million net operating income benefit from tariff refunds accounted for a substantial portion of the improvement. SG&A increased 19% to $408 million, reflecting planned advertising investments and tariff-refund-related incentive compensation.Inventory increased 14% year over year at cost, with units up 9%, partly reflecting incremental tariffs. Management plans to continue rebalancing inventory between brands and categories during the remainder of the year. Management expects fiscal 2026 comparable sales to increase in the mid-single digits, with gross margin projected to expand year over year. Operating income is expected in the range of $540-$550 million, inclusive of the net tariff-refund benefit. For the third quarter, comparable sales are expected to increase in the mid-to-high single digits, while operating income is projected at $110-$115 million.Aerie and OFFLINE are expected to remain the strongest contributors, with third-quarter comparable sales projected in the high-teens to 20% range. In contrast, American Eagle comps are expected to be approximately flat. The company expects third-quarter gross margin to be roughly flat year over year, while SG&A is projected to rise in the high-single digits. Aerie remains a powerful growth engine. Aerie revenues increased 25% in the second quarter to $536 million, while comparable sales rose 19%. Growth was broad-based across stores, digital channels and categories, including apparel, intimates and activewear. The brand is also expanding its customer base, with its Advocate program nearly doubling during the quarter.Aerie's relatively lower brand awareness compared with American Eagle provides additional room for expansion. Management is using digital marketing, in-store events, Realmakers and advocacy initiatives to increase engagement and attract new customers. Continued innovation across bras, intimates, apparel and coordinated outfitting should provide multiple avenues for growth.Strategic investments are strengthening the broader business. American Eagle has been investing in digital capabilities, distribution-center automation, inventory management and supply-chain diversification while working with sourcing vendors to reduce costs and lower exposure to China. These initiatives are designed to improve agility, inventory discipline and margin health.Operating leverage presents another opportunity. Management expects advertising to become a leverage line on a forward 12-month basis as the company laps elevated spending. AEO is also targeting SG&A leverage in fiscal 2027 if comparable sales grow at low-to-mid-single-digit rates. Continued efforts to control rent, delivery and distribution costs could further improve profitability if revenue growth remains healthy.The company also retains financial flexibility to fund growth initiatives and return capital to shareholders. AEO ended the second quarter with approximately $148 million in cash and investments and $783 million of total liquidity, including its revolver. It returned $21 million through its quarterly dividend during the quarter. Uneven performance at American Eagle remains a key concern. While consolidated comparable sales increased 6%, American Eagle comps declined 1%. Men's delivered a fourth consecutive quarter of positive comps, but the women's business continues to require improvement. The company is working through older denim fits and seasonal inventory, with shorts identified as a major area requiring cleanup. These challenges are also weighing on merchandise margins. AEO expects additional markdowns in the third quarter as it rebalances inventory. Consequently, the pace of margin recovery could remain constrained until the core American Eagle business achieves more consistent product and inventory execution.The second-quarter results benefited substantially from $196 million of IEEPA tariff refunds, including interest. The net operating-income benefit was $161 million, while substantially all refunds tied to submitted claims have now been received. Higher selling, general and administrative (SG&A) expenses could limit near-term operating leverage. SG&A increased 19% in the second quarter, driven primarily by planned advertising investments and tariff-refund-related incentive compensation. Management expects SG&A dollars to increase at a low-double-digit rate for fiscal 2026. While advertising is expected to begin leveraging as the company laps elevated spending, expense growth could remain a near-term pressure on profitability. American Eagle is showing encouraging signs, but the investment case remains dependent on whether strength at Aerie can continue to offset uneven trends at the core American Eagle brand. Aerie's strong comparable-sales growth, expanding customer base and product momentum provide a meaningful growth opportunity, while investments in digital capabilities, marketing, inventory management and supply-chain efficiency should support longer-term improvement.Further, AEO's improving sales trends, strong Aerie performance, potential for operating leverage and relatively attractive valuation support a favorable outlook. The stock trades at about 7.87X forward 12-month earnings, below the Zacks sub-industry average of 11.98X. Image Source: Zacks Investment Research Given Aerie's strong growth trajectory, improving execution at American Eagle and opportunities for margin expansion, AEO appears positioned for further upside, although investors should closely monitor the core brand's recovery and the normalization of tariff-related benefits. AEO currently carries a Zacks Rank #3 (Hold). FIGS, Inc. FIGS is an apparel company focused on the healthcare industry. Its offerings include lab coats, jackets, footwear, bags, socks and other accessories used by healthcare professionals. The company carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for FIGS’ current financial-year earnings and sales suggests growth of 89.5% and 18.2%, respectively, from the year-ago actuals. FIGS delivered a trailing four-quarter average earnings surprise of 201.8%.Boot Barn Holdings, Inc. BOOT is the largest lifestyle retailer in the United States, specializing in western and work-related footwear, apparel and accessories. The company also carries a Zacks Rank of 2 at present. The Zacks Consensus Estimate for Boot Barn’s current fiscal-year earnings and sales suggests growth of 22.6% and 15.7%, respectively, from the year-ago actuals. BOOT delivered a trailing four-quarter average earnings surprise of 11.4%.Fossil Group, Inc. FOSL is involved in designing, marketing and distributing consumer fashion accessories. It also carries a Zacks Rank of 2 at present.The Zacks Consensus Estimate for Fossil Group’s current fiscal-year earnings suggests growth of 96.7% from the year-ago actual. FOSL delivered an earnings surprise of 55.2% in the last reported quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT) : Free Stock Analysis Report Fossil Group, Inc. (FOSL) : Free Stock Analysis Report FIGS, Inc. (FIGS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, Sept. 9, 2026 at 4:30 p.m. ET Vice President of Corporate Communications - Alexis Tragos Executive Chairman and Chief Executive Officer - Jay Schottenstein President, Executive Creative Director for American Eagle and Aerie - Jen Foyle Chief Financial Officer - Ravi Thanawala Strategic Adviser - Mike Mathias Operator: Good afternoon, everyone. Welcome to the AEO Inc. Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Alexis Tragos, Vice President of Corporate Communications. Please go ahead. Alexis Tragos: Good afternoon, everyone. Joining me today for our prepared remarks are Jay Schottenstein, Executive Chairman and Chief Executive Officer; Jen Foyle, President, Executive Creative Director for American Eagle and Aerie; Ravi Thanawala, Chief Financial Officer; and Mike Mathias, Strategic Adviser. Before we begin today's call, I need to remind you that we will make certain forward-looking statements. These statements are based upon information that represents the company's current expectations or beliefs. The results actually realized may differ materially based on risk factors included in our SEC filings. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. You can find our second quarter investor presentation on our corporate website at www.aeo-inc.com in the Investor Relations section. Now I'll turn the call over to Jay. Jay Schottenstein: Thanks, Alexis, and good afternoon, everyone. The second quarter represented another important step forward for AEO. We built on the strength of our portfolio, making progress at American Eagle, while Aerie continued to deliver outstanding performance. The second quarter came in at the high end of our expectations, with revenue of $1.4 billion and comparable sales growth of 6%. Operating income of $211 million included a net tariff refund benefit of approximately $161 million. We remain focused on driving stronger profitability across the business and these results underscore the strength and relevance of our brands and the progress against our priorities. At Aerie, which includes OFFLINE, momentum continued. Aerie delivered revenue of 25% total growth and comparable sales grew 19%, reflecting the broad-based demand across categories and channels. We remain confident in the long-term opportunity for Aerie and our ability to reach new customers. Turning to American Eagle. Total revenue grew 1% with comps declining 1%, an improvement from the first quarter. AE men's posted its fourth consecutive quarter of positive comps, signaling continued traction and relevance. We are moving in the right direction, yet there remains work to do. Our progress is fueled by our people. I'd like to extend my gratitude to our associates for their relentless dedication and commitment to our brands and customers. Before I turn it over to Ravi, I want to take a moment to thank Mike for his many years of service to AEO. Mike has been and will continue to be a trusted partner to me and I'm grateful for his leadership, his commitment and the many contributions he has made to our business over the years. I'm also very pleased to welcome Ravi to the team. He brings comprehensive financial and operating expertise, a fresh perspective and a deep understanding of what drives long-term shareholder value. As we look at the opportunities ahead, I'm excited about the breadth of our experience and judgment he brings to the team as we work together to make AE our stronger, more productive business over time. Now I'll turn the call over to Ravi. Ravi Thanawala: Thank you, Jay. I'm excited to step into the CFO role. I've been at AEO for just a few weeks, so I'm spending a great deal of time listening, learning and getting to know the business and our teams. What attracted me to AEO was the strength of its brands, the connection to its customers and the opportunity I see to create meaningful long-term value for shareholders. I'll be focused on driving durable value creation by connecting brand growth with disciplined execution, stronger profitability and the thoughtful allocation of resources. Those are the areas where I'm spending time on with Jay and the leadership team as I get deeper into the business. It's still early, and I want to be thoughtful about drawing conclusions. However, I'm excited by the opportunity I see at AEO and look forward to sharing more about my perspective and priorities over time. I also wanted to thank Mike and the entire finance team for the support they have given me through this transition. Mike has been extremely generous with his time and his knowledge of AEO, and I'm grateful to have the benefit of his experience and perspective. Given how recently I joined the company, Mike will be taking you through the details of the second quarter results and the outlook. I have spent considerable time with Mike and the team reviewing the outlook and the assumptions supporting it. I'm comfortable with the company's expectations for the balance of the year. Now I'd like to turn the call over to Jen. Jennifer Foyle: Thank you, Ravi, and good afternoon, everyone. Before I get into the brand details, I want to share my appreciation to our entire organization. Their passion for our brands, our products and our customers shows up every day, and I am proud of the work they are doing. Aerie and OFFLINE delivered another outstanding quarter with broad strength across the business and tremendous response from our customers. At American Eagle, we made progress during the first quarter with continued strength in men's. There's still work to do, yet I'm encouraged by the opportunity ahead. Turning first to Aerie and OFFLINE. We delivered another exceptional quarter. Comparable sales increased 19%, and total revenue grew 25% to $536 million. What I'm most excited about is the breadth and quality of that growth. We saw strength across channels and categories with growth in core apparel, intimates and activewear. There was a consistent demand in Aerie apparel and tees, tanks, fleece and bottoms. Head-to-toe outfitting, curated monthly drops, sleep to street and wear now fabrications resonated with our customers, mix and match, summer brights, stripes and a little leopard all worked. We are also pleased with continued growth in OFFLINE's Cloud Fleece franchise, sports bras and incredibly strong results across bottoms. I love seeing this breadth because it tells us the customer's responding to the complete lifestyle offering, not just one category or one trend. Our core intimates business also remained strong throughout the quarter. We continue to win with what Aerie has stood for from the beginning, real comfort. Customers responded to our focus on fabrication and the 20 years of Happy Booties anniversary campaign. In July, we also introduced our new Float bra collection designed for weightless feel. Float complements our structured bra franchise and gives customers a new way to experience Aerie's signature comfort. Our customer base continues to grow. We are expanding the Aerie community and deepening their engagement with us. Our Aerie Realmakers continue to be an important part of that connection. Across the quarter, we nearly doubled the size of the Advocate program and found fresh new ways to bring new customers to the brand and engage them. As we move into the third quarter, we are doing something I love to see. We are comping the comp. We are sustaining growth against increasingly strong comparisons and seeing strength across categories while continuing to expand our customer base. So now turning to American Eagle. We are seeing steady traction as we actively work to refine our strategies. We delivered sequential improvement from the first quarter, yet there is opportunity to build on our progress and further accelerate our performance. Men's continues to deliver as we posted our fourth consecutive quarter of positive comps. Growth was driven by strength across all bottoms categories with tops continuing to meet our expectations. This demonstrates that our focus and strategies to restore top line growth in the AE men's business is paying off. In women's, customers responded well to our focus on outfitting, particularly pairing tiny tops with oversized bottoms. We leaned into the cargo trend, and fashion bottoms performed positively. In women's denim, new fashion fits, including wide leg straight and low rise gained strong acceptance. And moving forward, we recognize where there is still opportunity to restore consistent growth across categories. AE's brand awareness and cultural significance remains strong, and the active customer file continues to grow. Our marketing strategies are built on multiple touch points, tapping into differing interests, rituals and experiences. We have strategically invested in our presence at the mall as a place to shop, gather and connect, on campus with our sorority partners to own a stake in RushTok, and in sports on the biggest stage of the year with global brand ambassador, Lamine Yamal. We spent the last 4 quarters investing in brand awareness to drive purchase consideration, and now we are shifting our marketing dollars into conversion driving tactics. Ultimately, this is about showing up for our customers during their biggest moments, building their wardrobes while building our community. And looking ahead to the second half of this year, our strategic priorities across AEO are clear: deliver best-in-class products, maintain our investment in marketing tactics that drive conversion, remain focused on our inventory management and improve margin health. We are also making strategic investments in product and marketing as we build towards AEO's 50th anniversary in 2027. We entered the third quarter with momentum in Aerie and OFFLINE, a game plan to make clear improvements in American Eagle and a highly engaged customer community across all brands. And I'm excited about what the brands can accomplish together. Aerie's consistent growth, the opportunity we see in OFFLINE and American Eagle's deep customer relationships give us multiple ways to serve our customers across more categories, occasions and moments in their lives. Each brand has its own identity and distinct opportunities. Together, they give AEO springboard to grow. We have talented teams across our stores, distribution centers and corporate offices, bringing these brands to life every day, and I have tremendous confidence in what we can achieve together. Thank you all of our associates for all of your hard work. With that, I'll turn the call over to Mike. Mike Mathias: Thanks, Jen, and good afternoon, everyone. Driven by strong momentum across Aerie, our second quarter revenue and operating income hit the top end of our guidance. As you heard from Jay and Jen, we're zeroed in on opportunities for the AE brand and are continuing to fuel Aerie's exceptional growth. I'm going to take you through the financial results, including the impact of the tariff refunds recognized in the quarter and then discuss our outlook for the balance of the year. All reported results include the impact of tariff refunds. Second quarter consolidated revenue of $1.4 billion increased 8% to last year with comparable sales growing 6%. Aerie's strong business continued with total sales growing by 25% and comparable sales up 19% with growth across channels. AE total sales increased 1%, with comparable sales declining 1%. Gross profit dollars of $672 million rose 34% from last year and gross margin of 48.7% increased 980 basis points. Included in gross profit this year is a net benefit of $179 million related to tariff refunds, which drove 1,300 basis points of the gross margin expansion. Merchandise margin deleveraged 330 basis points with improvement in Aerie, offset by markdowns in AE, as we previously guided to for the second quarter. SG&A dollars increased 19% and 290 basis points to a rate of 29.6%, inclusive of $18 million of incentive expense attributable to tariff refunds. The remaining increase is primarily a result of planned investments in advertising. Depreciation decreased slightly year-over-year at $52 million compared to $55 million last year. We recorded a second quarter operating profit of $211 million compared to $103 million last year. Included in operating profit this year is a net benefit of $161 million related to tariff refunds. Interest expense increased primarily due to the sale of tariff claims as discussed last quarter. Other income increased due to unrealized gain on equity method investments. The second quarter tax rate was approximately 25%, and EPS was $0.79. Consolidated inventory cost was up 14% with units up 9%. The increase in costs includes the impact of incremental tariffs this year. Unit inventory plans will continue to be rebalanced between brands and categories for the remainder of the year. In the second quarter, as Jay noted, we continue to make long-term investments in our business while returning cash to shareholders. Second quarter CapEx totaled $66 million, and the company returned $21 million to shareholders during the quarter via the quarterly dividend. We ended the quarter with approximately $148 million in cash and investments and $783 million of total liquidity, including our revolver. Before turning to our outlook, I want to note that Ravi has been engaged with the team in reviewing our plans and expectations for the balance of the year. The outlook I'll discuss today reflects the company's current expectations. For the third quarter, we expect comparable sales growth in the mid- to high single digits with Aerie and OFFLINE continuing in the high teens to 20% range and American Eagle approximately flat. Gross margin is expected to be similar to last year with full year gross margin up year-over-year. Operating income for the third quarter is expected to be in the range of $110 million to $115 million with SG&A expense up in the high single digits. The tariff rate assumption for the rest of the year reflects the Section 301 tariffs implemented in late June. For the full year, we expect operating income in the range of $540 million to $550 million based on consolidated comparable sales growth in the mid-single digits. In closing, we're committed to building on the momentum in Aerie and OFFLINE, accelerating improvement at American Eagle and unlocking greater profitability across the business. With that, we'll open it up to questions. Operator: [Operator Instructions] The first question is from Jay Sole with UBS. Jay Sole: Great. Jen, I want to ask you about the women's denim business at American Eagle. Can you just maybe dive into that a little bit more? Tell us about how that business developed over the quarter, what you see happening in Q3 just from a sales standpoint and kind of what's driving that and the opportunity for continued progress from here. And then also maybe -- and second part to that question is you talked a little bit about third quarter. I think you said you've seen trends continue. If you can sort of clarify that a little bit, I mean, where do you see Aerie so far in Q3? And how is that factored into your guidance? Same question for both brands. Jennifer Foyle: Thanks. Look, we're seeing sequential improvement in denim. Sorry, I have a little bit of a cold, so just -- but we are seeing sequential improvement. As I mentioned in my last earnings call, we definitely need to pivot. We needed to pivot, and we pivoted quite nicely into the fits that were working 100%. Really, it was low rise that we really want to get into that business. And as you saw that, that was our marketing launch for back to school, so really excited about how we repositioned denim. What we are needing to work through right now is just some of the older fits and really just rebalancing our inventory. It's as simple as that, and our numbers reflect the guide in AE. As we look to Aerie, I mean, we continue to launch new ideas in Aerie. All categories are working. All categories are firing. We can't ask for more. I mean these numbers -- we're proving -- I love what I said, right? We're proving we can comp the comp. And I think the team's really geared up for holiday. We're seeing nice continuation of the sales comp again reflected in the guide. And with all our new launches, we relaunched our booty campaign, our undies campaign. Intimates is gaining share. Our Float bra launch, we're going to really work on bra innovation. That's a new playbook for us -- or we're going to reinvigorate it because we're excited about some new ideas in bras. I think we're really going to compete on that end with really launching ideas that I think our customers are going to really embrace, so some new ideas that are coming your way, and that will build into next year. And then, of course, apparel. Apparel has been really on fire. The numbers are incredible, and they like completing the outfit, right? We're building them from inside out, and that's what we do in Aerie, and OFFLINE certainly has seen incredible growth as well. Operator: The next question is from Matthew Boss with JPMorgan. Amanda Douglas: It's Amanda Douglas on for Matt. Jen, could you speak to the difference in merchandise margin performance within the quarter with improvement at Aerie offset by the American Eagle brand? And what are you specifically seeing on markdowns by brand entering back to school? Jennifer Foyle: Sure. We've seen a little pressure, as Mike mentioned, on seasonal ideas in AE. So we continue to see a little of that pressure as we go into Q3, so we're working through that, again, rightsizing our inventory. And Aerie has been doing an outstanding job leveraging this customer base. That's growing our brand awareness. That's another thing that I didn't mention in my last answer, the brand awareness in Aerie. We're still only at 59%. Albeit it's growing, there's still a lot of opportunity for runway in Aerie. But pivoting back, like as we think about the promotional cadence, Aerie has done a really nice job balancing out their promotions, leveraging the newness. They've been doing new drops, and we've been easily able to reconstruct the promotion activity between brands so that we're balancing this out. Operator: The next question is from Kelly Crago with BMO Capital Markets. Kelly Crago: So just wanted to dig in a little bit further on the third quarter comp guide up mid to high, if you could just break out expectations by brand. And any color again more explicitly about what you're seeing quarter-to-date at the 2 banners? I think then you're speaking to some maybe higher promos at Eagle than you were anticipating and how that might impact the margins in the third quarter. Mike Mathias: Kelly, I can take that. I think Jen mentioned in her prior answer that the comp guidance by brand is in line with where we are quarter-to-date, so AE relatively flat, so some sequential improvement from what we just reported for Q2. Aerie in the high teens to 20%, again, similar to what we just reported in Q2. So the trend continues there. And also, as Jen said, I mean, comping the comp and actually maintaining comp trend against tougher compares, which is what the team has been going after. So we have a good proof point here quarter-to-date in Aerie on that front. And then, yes, the merch margin performance in Q2 and some of the markdowns in AE that we guided to back in May, alongside our $45 million to $50 million guidance, those did come through kind of in line with expectations and then resulting in us hitting that high end of our op inc guide. And then for Q3, we do have -- as Jen said, we're definitely still looking to rebalance some inventory. We have some markdowns in the Q3 merch margin guide for AE, some potential markdowns as we go through that work, and that's covered in our gross margin guide of relatively flat for the third quarter. And Aerie is continuing its nice performance there on the merch margin line, so again, a little bit of a mixed brand output where Aerie is maintaining strength in margin. AE's definitely getting back to some strength, but we do have a little bit of markdown coverage for some of this inventory work that still needs to be done. Kelly Crago: Got it. And then just so I'm understanding with the tariff refund, I noticed you said something about -- I mean, like you're accruing some higher incentive comps here. Can you just kind of walk through how that plays out in the high single-digit SG&A guide, I think, is for 3Q? Apologies if I'm missing some of the details here. Is that like related to the higher incentive comp, marketing, anything else there? And then how does this sort of play in the fourth quarter as well? And that's all I got. Mike Mathias: Sure. Yes, we did book in the second quarter against tariff refunds, some incentive comp commensurate with the refund in line with our full year income targets tied to those incentive plans. The accrual for the back half, third and fourth quarter, I think I've guided to it now back in March and then again in May that's more -- that elevated accrual is up against more because it's up against a lower-than-historical result last year. So this path we're on in terms of that accrual is kind of more average or more historical. The impact of -- there's no impact in the third and fourth quarter to anything tied to refunds. So that was isolated against the refund benefit that we saw in the second quarter, any kind of incremental number. So the back half SG&A, we guided third quarter up high single. That includes, again, the impact of that more historical or average incentive accrual versus a lower accrual than history last year and with the rest of the line. Aerie advertising, relatively in line to -- as a rate of sale in the third quarter, some leverage in the fourth quarter. As we pass through -- look at SG&A on a go forward on a 12-month basis, advertising, we're lapping this elevated spend. As of this quarter, as we look forward on a go-forward basis, advertising will be a leverage line item into 2027. And as we normally get past these next couple of quarters, with a bit of an apples-and-oranges incentive accrual impact, that will also be a leverage line item as we go into 2027. So as we look at a 12-month basis and for the full fiscal 2027 period, we're looking to be back to a position where we're leveraging SG&A at a minimum at a mid-single-digit comp but targeting a low to mid-single in total. But again, the team and Ravi will provide more color on that go forward and specifically, when we give guidance for '27 in March as usual. Operator: The next question is from Jon Keypour with Goldman Sachs. Jonathan Keypour: I was -- you guys gave color about Eagle and mentioned that men sounded good across the board. Women's bottoms sounded good from what I heard. I'm just wondering what drove the negative comp. And then I have a follow-up. Jennifer Foyle: Women's bottoms has made improvements. So while we still mix the business, actually, other bottoms, so that means pants, cargoes, for instance, have done very exceptionally well, but there's still some balance to do in denim. But we are excited about the momentum in denim and what we've seen headed into Q3, so we're excited about that. Jonathan Keypour: Got it. And then you guys mentioned in your inventory comments some rebalancing going to take place and some continued promo activity extending into 3Q a little bit. I'm wondering, is that entirely overhang from the 1Q inventory in women's bottoms? Or was there also a little bit of overhang from 2Q that's moving now through 3Q? Jennifer Foyle: It's primarily concentrated on some seasonal businesses, shorts being the #1. And there is some fashion that we need to ensure that we're clearing. Operator: The next question is from Dana Telsey with Telsey Advisory Group. Dana Telsey: As you think about the later back-to-school time period, any assessment of if that had any impact on sales in either of the businesses? And then as you think about stores versus online, how is the performance for each business, whether it's in the metrics, traffic conversion in stores versus online and how the remodels are performing? Mike Mathias: Thanks, Dana. I think with us reporting today, we're through the full Labor Day period and Labor Day shift. So we have a good sense of kind of where we are quarter-to-date accounting for those shifts, and we'll pass really all the peak back-to-school periods, too, even though there were shifts within August and shifts here in early September. For the most part, we've got line of sight to those. So our -- again, the guidance by brand and in total, kind of mid-single-digit comp -- mid- to high single-digit comp for the quarter and the guidance by brand is commensurate with that quarter-to-date trend. And at this point, we've seen, for the most part, any kind of impact from shifts. Stores versus online business, I'll start with Aerie. Aerie is positive across the board. I think I used the description last quarter that all the conditional formatting is green. That's still the case that we're seeing quarter-to-date, stores, digital traffic in both channels, AUR, UPT, AOV, customer counts, you name it, all going in the right direction with strength across channels, strength across categories, strength across metrics. AE at a flattish result with guidance. Stores are definitely on the low end -- lower side of that and digital is stronger. So that's what we've kind of seen for a few quarters now, seeing that quarter-to-date here still in Q3. Stores have gotten better. So against the negative 1 comp in Q2, what we've seen quarter-to-date here in Q3 is stores coming back stronger. We always -- we tend to see that during these peak periods. We are a destination in the mall during back to school and holiday. We'll see how that plays out the rest of this quarter. So a little more rebalancing between channels versus what we saw in the second quarter but stores still on the lower side of the average. Operator: The next question is from Jonna Kim with TD Cowen. Jungwon Kim: Jen, just on the Aerie side for the holidays, I know you had very strong holiday last year with pajamas and other key items. How are you just thinking about the product assortment this year? And then especially on the Eagle side, is there anything that you're doing differently also around the holiday season? Jennifer Foyle: Yes. In both brands, we're very excited about -- honestly, the brand health for both brands has been extremely positive. So let's start with that. So what we're working on in the American Eagle side is really converting those customers and entertaining them, and we're very focused on getting them to stores. This is when we really gear up. I do think long legs are going to build into the -- into Q3 and into Q4. So with AE, that should be hopefully positive and some optimism there. Again, still 8 weeks to go in this quarter, but we're not into full long legs yet either. So I think we have some opportunity there. The key items that the teams have worked through, the new ideas, all of our fun ideas that we do during the holiday season in both brands, I think, we're really going to excite the customer there. Color, optimism, fun, Aerie is going to continue to do its drops as well as AE. All the newness drops have been working. It's new ways to reengage our customers and get them into the stores. And I think we have a lot brewing for the holiday season. Jungwon Kim: Just one more follow-up, Jen, on the Aerie side. Any color on how intimates perform and how you feel about the assortment there? Jennifer Foyle: Very nicely. We're exciting what we're seeing in intimates. There was some market share gain, and we're really focused on newness in bras as we move forward. Sports bras have been working well, other bras. But we really want to gain credit for all the innovation we do in our core bras, and I think there'll be a lot of work and some new innovation that you'll see on the go forward. Keeping in mind, as we head into Q4, we definitely dive into other categories as well. It's a gift-giving season, and I think Aerie does it best. Operator: Next question is from Adrienne Yih with Barclays. Angus Kelleher-Ferguson: This is Angus Kelleher on for Adrienne. Jen, you mentioned Aerie brand awareness is still around 59% despite the strong growth. What's the marketing plan to close that awareness gap and how much of the incremental ad spend in the back half is targeted at that versus performance/conversion marketing? Jennifer Foyle: We're not going to really disclose our ad spend contribution. However, if I looked at AE's brand awareness, which is roughly 76%, look at that gap right there and think about the comps that Aerie is able to drive. So I'm pretty excited about the opportunity there. Our goal is to get it at least equal, if not exceed the brand awareness that we see in our portfolio. What I will say, the teams are up to everything. I mean from in-store events to our double down on digital spend, which I think has been really optimized, connecting with our customers, building on our Aerie Realmakers, building on our advocacy program, everything has really begun -- we're firing on all cylinders, and the customer and the community is really responding. This is what -- where the magic happens in Aerie. This community that we're able to build and retain and ad, the spend, our spend is up per customer double digits, in line with these numbers that you're seeing. So I think the team -- it's our secret sauce, so we don't share that, but I think the team knows how to deliver on this. Angus Kelleher-Ferguson: Great. Great. And then just a quick clarifier for Mike and Ravi. Buying and occupancy, or BOW, they leveraged about 150 basis points last quarter but were roughly flat this quarter. I'm curious if there's anything to call out there regarding distribution costs, occupancy or anything else like that. And is that leverage plan to come back in the back half? Mike Mathias: Yes. I think for the second -- what you'd expect in the third and fourth quarter, to be similar to second quarter. First quarter, there was a little bit of shift between things with kind of the disposition or the wind down of our quiet third-party logistics business. So the BOW line, I'd expect from here to be -- to have similar results from a leverage perspective that we saw here in the second quarter. With more work to come, teams are constantly -- there's rent, delivery, distribution costs that are in that bucket of expenses. There's cross-functional teams still in place working on all those line items that we've -- since our expense initiative a few years ago, and that's still in place. Operator: The next question is from Rick Patel with Raymond James. Rakesh Patel: Can you unpack your expectations for gross margins a little further? How do we think about the puts and takes in Q3? And if that differs from your Q4 plans. I know that inventory cleanup is ongoing, so curious if that's done within Q3 or if that's something that spills over into Q4. Mike Mathias: Yes. I'll provide some additional detail there. So I think in general, we're looking for Aerie's continued strong performance, on the merch margin line to continue. AE, again, definite improvement from the first half of the year, some placeholder markdowns to cover us as we work through some of this inventory balancing. I just hit the BOW line item, similar expectations in the third and fourth quarter as the second quarter kind of been relatively in line to last year as a rate. I think the other moving parts, we do have some hedge in there, I'll call it, or the potential for some freight, fuel surcharge impacts. So we believe we're covered there. We don't know for sure exactly where things are going. Oil is over $100 a barrel again, but we want to make sure we're covered there. Not surprised by anything. Nothing significant to date, but the potential for that to happen is covered. And then from a tariff impact perspective, Q3 will be kind of a negligible difference to last year, again, with these -- the kind of the rates in place just announced in June versus kind of a partial quarter impact last year, the dollar difference is pretty negligible in the third quarter. And then at that 12.5 rate for fourth quarter, up again, it kind of full IEEPA tariffs. Could be a little upside but we're also -- we know that there's still kind of analysis and studies being done potential for some increase to those tariffs in the fourth quarter, some impact to the fourth quarter. If it doesn't happen, could be some upside there. So gross margin in general were -- all those ins and outs relatively flat for the third quarter, modest improvement in the fourth quarter in the guide. Operator: The next question is from Alex Straton with Morgan Stanley. Alexandra Straton: Perfect. Maybe for Ravi and Mike, if our math is right at refunds, it just looks like you're trimming the full year EBIT guidance just slightly compared to last quarter. So somewhat of a follow-up to the last question. I'm just trying to understand, is that just a higher incentive accrual? Or has your view on other pieces of SG&A or gross margin changed at all? Mike Mathias: No, I mean, you're right, Alex. Math would say we are trimming the back half guide a bit from where we were back in May. I'd say the #1 driver of that, if you remember the color -- or expectation was AE to be up like low positive -- or low single-digit positive. We're giving flat guidance for the balance of the year, so that's a piece of it. A little bit of markdown placeholder as we've described alongside that reduction to revenue expectations. Flip side of that, at least for the third quarter, Aerie at a high teen to 20 is ahead of where we thought, but the mix of that still taking a little bit off the income line based on the mix of that comp performance between brands. The SG&A line isn't much different. We talked kind of in line with sales mid- to high single, so a few million dollars there that we're still working on but not a big driver of the guidance trim. And in fourth quarter, it's similar. Essentially, we're guiding AE to flat. Actually, fourth quarter, our prior guidance was AE still low single positive for the back half in total, which meant fourth quarter as well. AE is flat, and we're looking at Aerie kind of more in the high single to low double range, which is the same place we thought. So the trim in both quarters is really just AE brand flat expectation versus up low single and a little bit of markdown kind of placeholder against that. I mean in total, we are -- the third quarter guide implied similar income result to last year, so much improved from the first half of the year, with work to do. Fourth quarter implies some operating rate improvement and kind of mid- to high single-digit income increase. So again, 12-month basis goes forward, making progress here in the back half even with a little bit of a reduction to guide and -- but positioned -- and positioning things, in general, across gross margin and SG&A plans to be back to revenue outpacing expense, op inc growth outpacing revenue growth and operating leverage again now that as we get into the back half into holiday and into next year, we're past tariff impact for the most part, even though there'll be some in and out there but mostly absorbed at this point. SG&A structured to leverage, like I said, at a low to mid-single-digit level in the next year. So we're confident that as we get into the holiday period and then into next year that we'll be back to income outpacing revenue growth and some operating rate improvement on a 12-month forward go basis -- 12-month forward basis. Alexandra Straton: That's super helpful. Maybe just on AE as a quick follow-up. After it gets to that maybe flat level in the back half, how do you think about the return to positive? And like what KPIs do you care most about as you're monitoring that trajectory? Mike Mathias: I think traffic is a big one. I think Jen can weigh in here, too. But I think, look, you start with the mix of what -- of product strategies first. I think the team feels good about where things are going forward. We're going to build on the sequential improvement we've seen quarter-over-quarter here. We're given a flat guide based on quarter-to-date performance in Q3. We're playing that forward into holiday. I think the team hopes to exceed that expectation through the balance of this year. Plan's in place next year to comp negative results. But being prudent about how we plan that and not -- this is -- this inventory work is making sure we're not getting ahead out of our skis in terms of inventory against the comp expectation for the first half next year, even though we're up against negative. So we want to make sure we're positioned to chase trend and not get too ahead of things there. So I think that the intention going forward is for AE on the metric side be driven by product strategies first. I think the marketing rebalancing we've been talking about, we're first -- the third quarter here is our first path at rebalancing that spend toward what was kind of top-of-funnel consideration, brand awareness to definite conversion driving purchase behavior type spend on the digital marketing, performance marketing away from bigger campaigns and top of funnel, and we're seeing some traction there with the sequential improvement we've seen so far quarter-to-date. Teams are building upon that into holiday and into next year as well. So I think traffic against -- traffic in stores and conversion against that traffic are definite focuses alongside product strategies go forward. Operator: The final question today will come from Marni Shapiro with The Retail Tracker. Marni Shapiro: Congrats on Aerie. It's really stunning to see it in every single haul for back to school. So I wanted to actually talk a little bit about Aerie. You're focusing on the bras, and I love that, and I thought the Float was a great launch. I'm curious about also the show-off in that collection, which feels a little sexier than what I'm used to seeing from Aerie. I like it. And you also had a couple of sheer bras that were always towards the front of the store and seem to always be selling out. So I'm curious if this is a shift for Aerie and you think that there's room for you guys to compete there. I think there is. And then I'm also curious if you're seeing that your customer is buying the matchback set, so the matching stripe bralette with the matching boyshort and then matching stripe sweatshirt to go with it. And is that helping to drive up basket, like you're fully outfitting her now? Jennifer Foyle: Marni, I think you could have taken this call for me. All of the above, that was perfectly said. Really, all bras are working. And we're going to really look to build out each franchise and find new ways to navigate bras. That's what we're up to right now. We do see these sets selling. We love how they go back to the apparel. And you'll see more of each category and probably some naming and claiming down the road. We have some excitement as we head into the back half and we go into really spring and really into back to school with some even -- we have plans, let me just say, all the way through. We're already planning how we're going to try to comp next back to school. We're going to do that with some of these ideas. Excited what the teams are delivering as far as innovation, novelty laces, new laces. They're doing an excellent job. And yes, this matchback is definitely an opportunity. Marni Shapiro: And is the sexier look an intentional look? And is it something that you can carry over to Eagle without getting away from the core DNA of the brand? Jennifer Foyle: Absolutely. But we have to do sexy in our way. I think we do it in a different way, and I think it's relevant. But I think there's ways to do it that can be cool and understandable for our customer base. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in American Eagle Outfitters, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Eagle Outfitters wasn’t one of them. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends American Eagle Outfitters. The Motley Fool has a disclosure policy. American Eagle (AEO) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

American Eagle Outfitters, Inc. AEO posted second-quarter fiscal 2026 earnings of 79 cents per share, up 75.6% year over year and above the Zacks Consensus Estimate of 21 cents by 276.2%. Net revenues rose 7.5% to $1.38 billion and beat the consensus mark of $1.37 billion by 1%.The earnings beat was aided by tariff-refund benefits, while Aerie and OFFLINE momentum supported sales growth. Consolidated comparable sales increased 6%, and American Eagle showed sequential improvement from the first quarter.American Eagle’s shares have lost 8.5% in the past three months compared with the industry’s 17.3% decline. Aerie revenues increased 25% year over year to $535.8 million, while comparable sales advanced 19%. Management cited broad-based strength across channels and categories, including core apparel, intimates and activewear. OFFLINE also benefited from demand for Cloud Fleece, sports bras and bottoms.American Eagle brand revenues rose 0.7% to $805.9 million, but comparable sales declined 1%. Men's delivered its fourth consecutive quarter of positive comps. Women's fashion bottoms and newer denim fits gained traction, though the company is still rebalancing older and seasonal inventory.We had expected Aerie revenues to grow 19.4% year over year to $512.5 million, while AE revenues to dip 1% to $792.1 million. American Eagle Outfitters, Inc. price-consensus-eps-surprise-chart | American Eagle Outfitters, Inc. Quote Gross profit climbed 34.4% year over year to $672.1 million, while gross margin expanded 980 basis points to 48.7%. A net $179 million tariff-refund benefit in gross profit contributed 1,300 basis points to the margin expansion. Merchandise margins deleveraged 330 basis points, with Aerie improvement offset by American Eagle markdowns.Selling, general and administrative expenses increased 19% to $408.4 million and rose 290 basis points, as a percentage of sales, to 29.6%. The quarter included $18 million of tariff refund-related incentive compensation expense. The remaining increase primarily reflected planned advertising investments.Operating income rose 105.1% year over year to $211.4 million, while operating margin increased 730 basis points to 15.3%. The quarter included a $161 million net operating income benefit from tariff refunds. This Zacks Rank #1 (Strong Buy) company ended the quarter with $148 million in cash and cash equivalents. Total liquidity, including the revolver, was $783 million. Merchandise inventory was $817.9 million, up 13.9% year over year, while units increased 9%.Capital expenditures were $66 million in the quarter. The company also returned $21 million to shareholders through its quarterly cash dividend of 12.5 cents per share. For the fiscal third quarter, AEO expects comparable sales growth in the mid-to-high single digits. Management sees Aerie and OFFLINE comps in the high teens to 20% range, while American Eagle is expected to be approximately flat.Gross margin is projected to be roughly flat year over year, with SG&A expenses rising in the high-single digits. Operating income is forecast between $110 million and $115 million. For fiscal 2026, the company expects comparable sales to increase in the mid-single digits and gross margin to rise year over year. SG&A expenses are projected to grow in the low-double digits, while depreciation and amortization is expected to be about $215 million.Operating income is forecast between $540 million and $550 million, inclusive of tariff-refund benefits, with a weighted average share count in the low 170 million range. Capital expenditures are expected between $250 million and $260 million. FIGS, Inc. FIGS is an apparel company focused on the healthcare industry. Its offerings include lab coats, jackets, footwear, bags, socks and other accessories used by healthcare professionals. The company carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for FIGS’ current financial-year earnings and sales suggests growth of 89.5% and 18.2%, respectively, from the year-ago actuals. FIGS delivered a trailing four-quarter average earnings surprise of 201.8%.Boot Barn Holdings, Inc. BOOT is the largest lifestyle retailer in the United States, specializing in western and work-related footwear, apparel and accessories. The company also carries a Zacks Rank of 2 at present. The Zacks Consensus Estimate for Boot Barn’s current fiscal-year earnings and sales suggests growth of 22.6% and 15.7%, respectively, from the year-ago actuals. BOOT delivered a trailing four-quarter average earnings surprise of 11.4%.Fossil Group, Inc. FOSL is involved in designing, marketing and distributing consumer fashion accessories. It also carries a Zacks Rank of 2.The Zacks Consensus Estimate for Fossil Group’s current fiscal-year earnings suggests growth of 96.7% from the year-ago actuals. FOSL delivered an earnings surprise of 55.2% in the last reported quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT) : Free Stock Analysis Report Fossil Group, Inc. (FOSL) : Free Stock Analysis Report FIGS, Inc. (FIGS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

American Eagle Outfitters (AEO) came out with quarterly earnings of $0.79 per share, beating the Zacks Consensus Estimate of $0.21 per share. This compares to earnings of $0.45 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +276.19%. A quarter ago, it was expected that this teen clothing retailer would post earnings of $0.11 per share when it actually produced earnings of $0.14, delivering a surprise of +27.27%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. American Eagle, which belongs to the Zacks Retail - Apparel and Shoes industry, posted revenues of $1.38 billion for the quarter ended July 2026, surpassing the Zacks Consensus Estimate by 0.99%. This compares to year-ago revenues of $1.28 billion. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. American Eagle shares have lost about 34.7% since the beginning of the year versus the S&P 500's gain of 12.1%. While American Eagle has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for American Eagle was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.56 on $1.42 billion in revenues for the coming quarter and $1.76 on $5.81 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Apparel and Shoes is currently in the top 30% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Zumiez (ZUMZ), is yet to report results for the quarter ended July 2026. The results are expected to be released on September 10. This clothing retailer is expected to post quarterly loss of $0.14 per share in its upcoming report, which represents a year-over-year change of -133.3%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Zumiez's revenues are expected to be $212.12 million, down 1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report Zumiez Inc. (ZUMZ) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research