Earnings release
Page 1
NEWS RELEASE AEO Inc. Reports Second Quarter Fiscal 2026 Results 2026-09-09 Record revenue increases to $1.4 billion with total comparable sales up 6% Aerie and OFFLINE total revenue grew 25% – including 19% comparable sales growth Updates scal 2026 operating income guidance in the range of $540 to $550 million, inclusive of net tari refund bene t PITTSBURGH--(BUSINESS WIRE)-- American Eagle Out tters, Inc. (NYSE: AEO) today announced nancial results for the second quarter ended August 1, 2026. “The second quarter re ects 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 rst 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 O cer - AEO Inc. “Looking ahead to the second half, we are committed to building on the continued momentum in Aerie and OFFLINE, accelerating improvement at American Eagle, and unlocking greater consistency and pro tability across the business,” he concluded. Second Quarter 2026 Results: Total net revenue of $1.38 billion increased 8% to last year. Total comparable sales increased 6%. Aerie comparable sales grew 19%. American Eagle comparable sales decreased 1%. Gross pro t of $672 million rose 34% from $500 million last year and gross margin of 48.7% expanded 980 1
Page 2
basis points. Included in gross pro t this quarter is a net bene t of $179 million related to tari refunds, which drove 1300 basis points of the gross margin expansion. Merchandise margins deleveraged 330 basis points, with margin rate improvement in Aerie o set by American Eagle. Selling, general and administrative (SG&A) expenses of $408 million increased 19% and 290 basis points to a rate of 29.6%. Included in SG&A this quarter is $18 million, or 130 basis points, of tari refund related incentive compensation expense, partially o set by tari refunds received. The remaining increase was primarily driven by planned investments in advertising. Operating pro t was $211 million compared to $103 million last year. Operating margin of 15.3% compared to 8.0% last year. Included in operating pro t this quarter is a net bene t of $161 million related to tari refunds, which drove 1170 basis points of the operating margin expansion. Other income of $14 million included a $12 million gain on equity method investments. Interest expense of $47 million increased due to an agreement related to the sale of certain tari refund claims. Diluted earnings per share of $0.79 compared to $0.45 last year. Average diluted shares outstanding were 170 million. Inventory Consolidated inventory at cost was up 14%, with units up 9%. The increase in cost includes the impact of incremental tari s this year. Unit inventory plans will continue to be rebalanced between brands and categories for the remainder of the year. Tari Refunds During the second quarter, the company received International Emergency Economic Powers Act (IEEPA) tari refunds of $196 million, including interest. These tari refunds bene tted the company’s second quarter 2026 results. Accordingly, the company accrued incremental incentive compensation of $35 million in the quarter, which impacted both gross pro t and SG&A expenses. The net operating income bene t of tari refunds was $161 million for the second quarter 2026. The company has received substantially all of the tari refunds for which it submitted refund claims. Additionally, during the second quarter, the company recorded interest expense of $45 million related to an agreement with a third-party buyer for the sale of certain tari refund claims entered into during the prior scal year. 2
Page 3
Shareholder Returns During the second quarter, the company returned $21 million to shareholders via a quarterly cash dividend of $0.125 per share, paid to shareholders of record as of July 10, 2026. Capital Expenditures Capital expenditures totaled $66 million in the second quarter. The company expects 2026 capital expenditures to be in the range of $250 to $260 million. Outlook All guidance is based on estimates and includes the impact of IEEPA tari refunds. Third Quarter 2026 OutlookFiscal Year 2026 Outlook Comparable Sales+Mid-to-High Single Digits+Mid Single Digits Gross Margin Flat YoY Up YoY SG&A +High-Single Digits+Low-Double Digits Depreciation and Amortization$55 M Approximately $215 M Operating Income $110 M to $115 M $540 M to $550 M Weighted Average Share CountLow 170 millions Low 170 millions Webcast and Supplemental Financial Information Management will host a conference call today at 4:30 p.m. Eastern Time. To access the live webcast and audio replay, please click here. Additionally, a nancial results presentation is posted in the Investor Relations section on AEO’s website, www.aeo-inc.com. About American Eagle Out tters, Inc. American Eagle Out tters, Inc. (NYSE: AEO) is a leading global specialty retailer with a portfolio of beloved apparel brands including American Eagle, Aerie, OFFL/NE by Aerie, Todd Snyder and Unsubscribed. Rooted in optimism, inclusivity and authenticity, AEO’s brands empower every customer to celebrate their unique personal style by o ering casual, comfortable, timeless out tting and high-quality products that are made to last. AEO Inc. operates stores in the United States, Canada and Mexico, with merchandise available in more than 30 countries through a global network of license partners. Additionally, the company operates a robust e-commerce 3
Page 4
business across its brands. For more information, visit aeo-inc.com. SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This release and related statements by management contain “forward-looking statements” (as such term is de ned in the Private Securities Litigation Reform Act of 1995), which represent management’s views, expectations, beliefs, assumptions and estimates concerning future events, including, without limitation, expected results for the third quarter and full-year scal 2026. All statements other than statements of historical facts contained in this release and related statements by management are forward-looking statements. Words such as "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intend," "may, "outlook, "plan," "potential," "project," "should," "target," "will," or "would" or the negative of these terms or other similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. All forward-looking statements made by the company are inherently uncertain because they are based on assumptions and expectations concerning future events and are subject to change based on many important factors, some of which may be beyond the company’s control. You are cautioned to not unduly rely upon these statements. Any forward-looking statement speaks only as of the date on which such statement is made, and except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward- looking statements whether as a result of new information, future events or otherwise. Because these forward- looking statements involve known and unknown risks and uncertainties, the following important factors, in addition to the risks disclosed in Item 1A., Risk Factors, of our Annual Report on Form 10-K for the scal year ended January 31, 2026 and in any other lings that we have made or may in the future make with the Securities and Exchange Commission, in some cases have a ected, and in the future could a ect, the company's nancial performance and could cause actual results to di er materially from those expressed or implied in any of the forward-looking statements included in this release or otherwise made by management: the risk that the company’s operating, nancial and capital plans may not be achieved; our inability to anticipate uctuations in customer demand and respond to changing consumer preferences and fashion trends and to manage our inventory commensurately; the seasonality of our business; our inability to achieve planned store nancial performance and gain market share in the face of declining shopping center tra c or attract customers to our stores; our inability to react to raw material cost, labor and energy cost increases; our inability to respond to changes in e-commerce and leverage omni- channel capabilities; our inability to execute on our key business priorities; our inability to expand internationally; di culty with our international merchandise sourcing strategies; the impact that foreign trade issues, including import tari s and other trade restrictions imposed by the U.S., China or other countries have had, and may continue to have, on our product costs, as well as continued uncertainty with respect to tari s and other trade restrictions, the possibility that product costs may be a ected by other foreign trade issues, such as the availability of further tari refunds, currency exchange rate uctuations, increasing prices for raw materials, supply chain 4
Page 5
issues, the potential for a trade war, political instability or other reasons; challenges with information technology systems, including safeguarding against security breaches; changes to U.S. or other countries' trade policies and tari and import/export regulations, and global economic, public health, social, political and nancial conditions, and the resulting impact on consumer con dence and consumer spending, as well as other changes in consumer discretionary spending habits, which could have a material adverse e ect on our business, results of operations and liquidity. In addition, we operate in a highly competitive and rapidly changing environment; therefore, new risk factors can arise, and it is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on our business or the extent to which any individual risk factor, or combination of risk factors, may cause results to di er materially from those contained in any forward-looking statement. The use of the “company,” “AEO,” “we,” "us," and “our” in this release refers to American Eagle Out tters, Inc. AMERICAN EAGLE OUTFITTERS, INC.CONSOLIDATED BALANCE SHEETS (Unaudited)(In thousands) August 1, 2026August 2, 2025 Assets Current assets:Cash and cash equivalents $ 147,954$ 126,780Merchandise inventory 817,910 718,337Accounts receivable, net 245,231 237,355Prepaid expenses 103,331 167,295 Other current assets 22,257 21,335 Total current assets 1,336,6831,271,102Operating lease right-of-use assets 1,646,8451,604,457Property and equipment, at cost, net of accumulated depreciation814,979 773,872Goodwill, net 225,181 225,231Non-current deferred income taxes 93,664 48,322Intangible assets, net 35,974 40,674 Other assets 125,495 97,374 Total assets $ 4,278,821$ 4,061,032 Liabilities and Stockholders’ Equity Current liabilities:Accounts payable $ 253,663$ 247,578Current portion of operating lease liabilities309,108 321,334Accrued compensation and payroll taxes 94,629 49,534Unredeemed gift cards and gift certi cates62,837 57,376Accrued income and other taxes 29,084 30,631 Other current liabilities and accrued expenses90,067 76,932 Total current liabilities 839,388 783,385Non-current liabilities:Non-current operating lease liabilities 1,556,6391,473,119Long-term debt, net 55,000 203,000 Other non-current liabilities 65,479 56,918 Total non-current liabilities 1,677,1181,733,037Stockholders’ equity:Preferred stock — —Common stock 2,496 2,496Contributed capital 360,833 369,478Accumulated other comprehensive loss (16,357) (34,646)Retained earnings 2,678,3712,416,980 Treasury stock (1,261,525) (1,213,046) Total AEO stockholders' equity 1,763,8181,541,262Non-controlling interests (1,503) 3,348 Total stockholders’ equity $ 1,762,315$ 1,544,610 Total liabilities and stockholders’ equity$ 4,278,821$ 4,061,032 Current Ratio 1.59 1.62 5
Page 6
AMERICAN EAGLE OUTFITTERS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; Dollars and shares in thousands, except per share amounts)13 weeks ended August 1, 2026August 2, 2025 (In thousands)(Percentage of revenue)(In thousands)(Percentageof revenue)Total net revenue $ 1,380,375100.0%$ 1,283,675100.0% Cost of sales, including certain buying, occupancy and warehouse expenses708,31151.3 783,71361.1 Gross pro t 672,06448.7 499,96238.9Selling, general and administrative expenses408,35429.6 342,21126.7 Depreciation and amortization expense52,305 3.8 54,6664.2 Operating income $ 211,40515.3$ 103,0858.0Interest expense, net 47,125 3.4 1,919 0.1 Other (income) loss, net (13,771) (1.0) 648 0.1 Income before income taxes $ 178,05112.9$ 100,5187.8 Provision for income taxes 44,366 3.2 23,7051.8 Net income $ 133,6859.7$ 76,8136.0 Net loss attributable to non-controlling interests399 0.0 820 0.0 Net income attributable to AEO$ 134,0849.7%$ 77,6336.0% Basic net income per common share attributable to AEO$ 0.80 $ 0.45Diluted net income per common share attributable to AEO$ 0.79 $ 0.45Weighted average common shares outstanding - basic167,059 170,756Weighted average common shares outstanding - diluted170,180 171,659 AMERICAN EAGLE OUTFITTERS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; Dollars and shares in thousands, except per share amounts)26 weeks ended August 1, 2026August 2, 2025 (In thousands)(Percentage of revenue)(In thousands)(Percentage of revenue)Total net revenue $ 2,575,660100.0%$ 2,373,275100.0% Cost of sales, including certain buying, occupancy and warehouse expenses1,447,42556.2 1,550,89265.3 Gross pro t 1,128,23543.8 822,38334.7Selling, general and administrative expenses784,84630.5 680,99828.7Impairment and restructuring charges— 0.0 17,1190.7 Depreciation and amortization expense103,7604.0 106,3634.5 Operating income $ 239,6299.3$ 17,9030.8Interest expense, net 54,978 2.1 1,700 0.1 Other (income) loss, net (20,993) (0.8) 816 (0.0) Income before income taxes $ 205,6448.0$ 15,3870.7 Provision for income taxes 49,024 1.9 3,992 0.2 Net income $ 156,6206.1$ 11,3950.5 Net loss attributable to non-controlling interests987 0.0 1,339 0.0 Net income attributable to AEO$ 157,6076.1%$ 12,7340.5% Basic net income per common share attributable to AEO$ 0.94 $ 0.07Dild i h ibbl AEO $ 092 $ 007 6
Page 7
Diluted net income per common share attributable to AEO$ 0.92 $ 0.07Weighted average common shares outstanding - basic167,447 175,156Weighted average common shares outstanding - diluted171,277 176,482 AMERICAN EAGLE OUTFITTERS, INC.NET REVENUE BY SEGMENT (Unaudited; Dollars in thousands)13 weeks ended26 weeks ended August 1, 2026August 2, 2025August 1, 2026August 2, 2025Net Revenue:American Eagle $ 805,883$ 800,406$ 1,484,359$ 1,494,271Aerie 535,822429,0841,016,648788,872Other 38,670 61,523 74,653 105,494 Intersegment Elimination — (7,338) — (15,362) Total Net Revenue $ 1,380,375$ 1,283,675$ 2,575,660$ 2,373,275 AMERICAN EAGLE OUTFITTERS, INC.STORE INFORMATION (Unaudited) 13 weeks ended26 weeks endedAugust 1, 2026August 1, 2026 Consolidated stores at beginning of period 1,170 1,168Consolidated stores opened during the periodAE Brand (1) — 3Aerie (incl. OFFL/NE)(2) 2 5Consolidated stores closed during the periodAE Brand(1) (2) (6)Aerie (incl. OFFL/NE)(2) (2) (2) Unsubscribed (1) (1) Total consolidated stores at end of period 1,167 1,167 Stores by BrandAE Brand (1) 802Aerie (incl. OFFL/NE)(2) 335Todd Snyder 23 Unsubscribed 7 Total consolidated stores at end of period 1,167 Total gross square footage at end of period (in '000)7,260International license locations at end of period(3) 376(1)AE Brand includes AE stand alone locations, AE/Aerie side-by side locations, AE/OFFL/NE side-by-side locations, and AE/Aerie/OFFL/NE side-by-sidelocations.(2)Aerie (incl. OFFL/NE) includes Aerie stand alone locations, OFFL/NE stand alone locations, and Aerie/OFFL/NE side-by-side locations.(3)International license locations (retail stores and concessions) are not included in the consolidated store data or the total gross square footagecalculation. Corporate Communications & Investor Relations 412-432-3300 LineMedia@ae.com Source: American Eagle Out tters, Inc. 7