Changes in US stocks | The star effect boosted American Eagle Apparel (AEO.US) by 24% after the market, but profit guidelines were lowered due to tariff pressure

The Zhitong Finance App learned that American Eagle Apparel (AEO.US) rose 24.52% after the market on Wednesday to $16.96. According to the news, American Eagle Apparel announced its results for the second quarter of 2025 on Wednesday. A number of indicators far exceeded market expectations: earnings per share reached 0.45 US dollars, a significant increase from the expected 0.20 US dollars; revenue of 1.28 billion US dollars, higher than the forecast of 1.23 billion US dollars. The company also announced the re-release of its previously withdrawn full-year results guidance. Comparable sales are expected to remain flat, better than the 0.2% decline expected by analysts, but the annual revenue forecast was lowered from 360 million to 375 million US dollars to 255 million to 265 million US dollars, mainly impacted by tariff costs — the loss of 20 million US dollars is expected in the third quarter, and it will expand to 40 million to 50 million US dollars in the fourth quarter.

This quarter's results were boosted by star collaborations with Sydney Sweeney (Sydney Sweeney) and Travis Kelce (Travis Kelce). The “Great Jeans” advertising campaign with “Excited” star Sweeney sparked controversy but became the “best so far” marketing case: the campaign led to sold out of jeans; Sydney jackets and custom-made jeans were sold out in a single day, and all related proceeds were donated to mental health organizations; traffic grew in double digits, and brand awareness and engagement increased significantly.

The Tru Kolors co-branded series with Kelsey was launched the day after the latter's engagement to Taylor Swift. The single-day sales volume reached three times the week of the previous collaboration series, and many products sold out quickly. Previously, the company had collaborated with tennis player Coco Gauff (Coco Gauff) and actress Jenna Ortega (Jenna Ortega) to further cultivate Gen Z consumers — behind this strategy, the PwC survey showed that economic uncertainty is causing the biggest drop in US holiday spending since the pandemic, especially in the context of Gen Z shoppers cutting expenses, and the company's precise layout for young people.

In response, American Eagle Apparel expects comparable sales to increase by about 10% in the third quarter, higher than analysts' expectations of 0.9%. The fourth quarter will maintain the same growth trend, and the fall will start well. However, the company also faced multiple challenges. eMarketer analyst Skye Canavis pointed out that the impact of tariffs, increased advertising spending, and a surge in holiday promotions may weaken profits, but currently these marketing activities have driven sales growth, which is enough to offset some of the losses.

Furthermore, product marketing mistakes, consumer purchases becoming more cautious, tariff pressure and increased competition in the industry — Abercrombie & Fitch launched a “Better in Denim” advertisement, Levi's collaborated with Beyonce, and Gap focused on sports marketing and cooperated with the NFL, all putting competitive pressure on American Eagle Apparel. Furthermore, the company is reducing its dependence on Chinese manufacturing to less than 10%, but factories in Vietnam and India are still affected by reciprocal tariffs.

Although the controversial campaign drew some criticism, such as those on the left questioning the “Great Jeans” slogan involving eugenics pun, while the right and Trump praised it as the “hottest ad,” the company emphasized that the campaign had attracted 700,000 new customers and that omnichannel traffic continued to grow positively in August, successfully offsetting some market pressure. Analysts believe that although star cooperation is driving up advertising expenses, the current sales growth is sufficient to make up for loss of profits, and we need to continue to pay attention to the impact of tariffs and strategic results in the future.