American Eagle On Wednesday, the partnership with Sydney Sweeney was the “best” advertising campaign to date, and the “best” advertising campaign to date, as it announced its second-quarter revenues that beat expectations.
The flashy yet controversial campaign with the company’s “Euphoria” star has led to some criticism and blowback, but combined with his recent partnership with Taylor Swift’s new fiance, Travis Kelce, has led to new customer acquisition and positive traffic across the channel.
Eaglestock in the US spiked over 20% in after-hours trading on Wednesday.
“The fall season is off to a positive start. As it has been spurring the success of its more powerful product offerings and the recent success of its marketing campaigns with Sydney Sweeney and Travis Kelse, we have seen an increase in customer awareness, engagement and comparable sales.” “We look forward to building on our progress and the continued strength of our iconic brands to promote higher profitability, long-term growth and shareholder value.”
The company also reissued its full-year guidance after withdrawing it earlier this year. According to StreetAccount, it is expected that comparable sales will be roughly flat if they outperform the 0.2% decline analysts had expected.
Although the total margin is expected to decrease over this year, we have made significant changes to our operating profit outlook, which will bear the brunt of the tariff impact. The company currently expects full year operating profit to be between $255 million and $265 million, down from the $360 million to $375 million range.
Based on an analyst survey by LSEG, here is how American Eagle played in the quarter compared to what Wall Street had expected:
Earnings per share: 45 cents vs 21 cents forecast: 1.28 billion vs 1.24 billion dollars
The company had net income for the three months ended August 2nd of $77.6 million, or 45 cents per share, compared to the previous year’s $77.3 million, or 39 cents per share.
Revenue fell to $1.28 billion, a slight decline from $1.29 billion the previous year.
According to StreetAccount, American Eagle expects comparable sales to rise in the low single-digit range for the current quarter. The same trend is expected in the fourth quarter.
So far, American Eagle’s performance has been undermined by merchant missteps, tariffs and uncertain consumers as it is more selective when spending money on products such as clothing and shoes.
To turn things around, American Eagle launched a campaign with Sweeney ahead of the crucial backtool shopping season, but in a way it backfired when it sparked anger from some customers.
The slogan chosen by the American Eagle for his campaign was “Sidney Sweeney has great jeans” – leading the critics on the left, saying that the statement was a double promotion and a nod to eugenics. Meanwhile, people on the right celebrated the campaign, leading President Donald Trump to call it the “hottest” ad.
More widely, the campaign also faces pushbacks from people who say the ads are overly sexual and have not been in contact with them, leading to doubt what kind of consumers the company is targeting.
The campaign began on July 23rd at the second quarter tail end of American Eagle, but the company said it has been successful so far despite the pushbacks it received. The Sweeney campaign, along with a partnership launched with Kelse, brought about “meaning improvements to the business” with mid-single numbers for the quarter. American Eagle has attracted 700,000 new customers and said traffic across the channel has been “consistently positive” throughout August, but several news reports have pointed to the opposition.
The Sweeney campaign has resulted in increased denim sold out, double-digit traffic growth, and awareness and involvement, the company said. The Sydney Jacket sold out in one day, and Sydney Jean provided mental health support in a custom style that donated 100% of its revenue to the Crisis Text Line, and sold out in one day.
Meanwhile, the day after announcing his engagement to the pop star, the American Eagle launch with Kansas City Chiefs tight end Kelce, three times more sales in a day than previous collaborations, the company said. Many of the items, especially those worn by Kelse and his fellow athletes, were sold out.
The American Eagle partnership between Sweeney and Kelce highlights the work retailers do to maintain a relationship with consumers, reducing noise due to soft spending.
He also faces tough competition with his peers Abercrombie & Fitch, gap and Levy. Recently, Gap launched a “Better in Denim” campaign featuring Katseye and Kelis’ 2003 hit “Milkshake.” Meanwhile, Levi’s has run a continuous campaign featuring Beyoncé, while Abercrombie is focused on sports and partnering with the NFL.
It is an uncertain customs environment that further complicates the challenges of American Eagle. American Eagle has been working to reduce its dependence on China to less than 10% this year, but there is a manufacturing presence in Vietnam and India, which are subject to mutual tariffs.
