What happened

Shares of American Eagle Outfitters (NYSE:AEO) were up 5.5% in morning trading Wednesday ahead of the apparel retailer reporting first-quarter earnings after the market closes.

So what

Many retailers are posting strong quarterly financials as they go up against comparatively weak comparable sales from the year-ago period, which was partially marred by the coronavirus pandemic outbreak. Both Abercrombie & Fitch and Urban Outfitters just handily beat estimates.

Four young women wearing loungewear pose in front of a pink background.

Image source: American Eagle Outfitters.

Investors might view American Eagle as prepared to beat analyst expectations on the strength of its Aerie loungewear brand, which has been a strong performer throughout. Especially as working from home became an imperative for many -- and still is -- comfortable clothes that met various fashion needs became de rigueur for consumers. 

Analysts expect Aerie to become a $2 billion to $3 billion brand, and it already accounts for 40% American Eagle's sales.

Now what

Wall Street expects American Eagle to post revenue of $1.02 billion, up 85% over the year-ago quarter, generating earnings of $0.47 per share compared to an adjusted loss of $0.84 per share (analyst estimates typically don't include one-time items that companies end up adjusting their results for).

It already looks as though American Eagle is expected to post robust results, so the market will end up reacting tomorrow to just how much the retailer beats (or misses) those forecasts.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.