American Eagle Outfitters (AEO) Q2 2027 earnings summary

Executive summary

• Second quarter revenue reached $1.38 billion, up 8% year-over-year, with total comparable sales increasing 6%, driven by 25% growth in Aerie and sequential improvement in American Eagle.

• Operating income was $211 million, more than doubling year-over-year, aided by a significant net tariff refund benefit.

• Net income attributable to shareholders rose 73% to $134 million, with diluted EPS increasing to $0.79 from $0.45.

• The company completed the wind-down of Quiet Platforms, its third-party fulfillment business, with minimal impact on results.

• Transition in CFO role, with Ravi Thanawala joining and Mike Mathias supporting the transition.

Financial highlights

• Gross profit rose 34% to $672 million, with gross margin expanding 980 basis points to 48.7%, primarily due to $192 million in tariff refunds.

• Operating margin improved to 15.3% from 8.0% year-over-year, with a $161 million net benefit from tariff refunds.

• SG&A expenses increased 19% to $408 million, driven by higher compensation, incentive expenses tied to tariff refunds, and increased advertising.

• Inventory at cost increased 14% year-over-year, with units up 9%, reflecting incremental tariffs and ongoing inventory rebalancing.

• Cash and cash equivalents at quarter-end were $148 million; total liquidity was $783 million.

Outlook and guidance

• Fiscal 2026 operating income expected in the range of $540–$550 million, including tariff refund benefits.

• Third quarter comparable sales expected to grow mid- to high-single digits; Aerie and OFFLINE projected in the high teens to 20% range, American Eagle approximately flat.

• Gross margin for Q3 expected to be similar to last year; full-year gross margin up year-over-year.

• SG&A and depreciation/amortization projected to increase high-single to low-double digits for the year.

• Management expects FY2026 capital expenditures of $250–$260 million, focused on store expansion, IT, e-commerce, and supply chain.