Culture is expensive: American Eagle bets on buzz as tariffs and rivals close in

"American Eagle has become the loudest voice in the denim wars. The brand's high-profile campaigns with Sydney Sweeney and Travis Kelce have drawn 40 billion impressions, sold out products and brought in just under 800,000 new customers since late July. But as supply chain costs surge and pricing pressure builds, investors are asking whether American Eagle's focus on cultural heat is coming at the cost of sustainable growth."

"The numbers paint a mixed picture. Net revenue for Q2 fell 1% year-over-year to $1.28 billion. Comparable sales were down 1%, with AE brand comps down 3%. Aerie grew 3%, bolstered by continued strength in intimates, which Foyle confirmed still make up "approximately 40% of the assortment." While earnings per share rose 15% to $0.45, this was largely driven by $231 million in share buybacks. Average unit retail dropped 5%, and inventory rose 8%."

"But not all categories are hitting. "We saw softness in shorts, sweaters and core basics - categories that we know are important, but didn't quite land," she added. To course-correct, she confirmed that Aerie "hired a new lead merchant to better align our assortments and drive speed and relevance.""

American Eagle's celebrity campaigns with Sydney Sweeney and Travis Kelce generated about 40 billion impressions, rapid sellouts, and nearly 800,000 new customers since late July. Denim momentum focused on fits like Dreamy Drape and Athletic, prompting restocks, while shorts, sweaters and core basics underperformed. Q2 net revenue declined 1% to $1.28 billion and comparable sales fell 1%; AE comps dropped 3% while Aerie grew 3%, driven by intimates at roughly 40% of the assortment. Earnings per share rose 15% to $0.45, boosted by $231 million in share buybacks. Average unit retail decreased 5% and inventory rose 8%.

Read at Digiday