American Eagle Outfitters (AEO) has raised its guidance for the fourth quarter (Q4) of fiscal year 2025 (FY25) following better-than-expected third-quarter results.
The company’s total net revenue for the quarter ended November 1, 2025 grew 6% year-over-year (YoY) to $1.36 billion.
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 U.S., Canada and Mexico.
Aerie posted an 11% increase in comparable sales, while American Eagle’s comparable sales increased 1%.
Gross profit grew 5% to $552 million. Gross margin fell 40 basis points to 40.5%, which the company attributed to a net tariff impact of $20 million and higher markdowns.
These pressures were partially offset by lower freight costs and benefits from sales leverage. Purchase, occupation and storage expenses improved 20 basis points.
Operating profit reached $113 million, compared to $106 million in the same period last year.
Other income amounted to $14 million, which included a previously disclosed unrealized investment gain of $13 million.
Diluted earnings per share were $0.53, up 29% year over year. Adjusted diluted earnings per share increased 10%, based on 173 million diluted shares.
Ending inventory stood at $891 million, an increase of 11%, and units increased 8%.
So far this year, AEO has completed $231 million in share buybacks, all executed in the first half of the fiscal year.
In the third quarter, the company returned $21 million to shareholders through its quarterly dividend of $0.125, bringing total dividend payments so far this year to $64 million.
Full-year capital spending is projected to be approximately $275 million.
Thanks to improving sales trends, AEO has raised its fourth quarter operating income guidance to $155 million to $160 million, assuming comparable sales growth of 8 to 9%.
The company also raised its full-year adjusted operating income outlook to $303 million to $308 million, up from its previous range of $255 million to $265 million.
Despite the improved earnings guidance, AEO expects gross margin to decline year-over-year in both the fourth quarter and the full fiscal year, citing an expected net tariff impact of approximately $50 million in the fourth quarter and $70 million for FY25.
AEO Executive Chairman and CEO Jay Schottenstein said: “I am extremely pleased with the significant turnaround in our business, which reflects the decisive steps taken from merchandising to marketing and operations, all having a positive impact.”
“American Eagle Outfitters Improves Full-Year Outlook After Third Quarter Revenue Increase” was created and originally published by Retail Insight Network, a brand owned by GlobalData.
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