Shares of American Eagle Outfitters (AEO 0.11%) were climbing up the charts today as the teen-focused apparel retailer posted better-than-expected results in its second-quarter earnings report, fueled by recent marketing campaigns with Sydney Sweeney and Travis Kelce.
After a weak first half, its guidance also called for the business to return to growth in the second half of the year.
As of 9:50 a.m. ET, the stock was up 28.4% on the news.
Image source: Getty Images.
American Eagle takes flight
Overall comparable sales in the quarter were down 1% with 3% growth in Aerie and a 3% decline in American Eagle.
Revenue fell 1% to $1.28 billion, topping estimates at $1.24 billion. Gross margin inched up from 38.6% to 38.9%, and earnings per share rose 15%, benefiting from aggressive share buybacks, to $0.45, well ahead of the consensus at $0.20, as shares outstanding fell by 13%.
CEO Jay Schottenstein said, "We were pleased to see an improvement in the business during the second quarter driven by higher demand, lower promotions, and well-managed expenses, all of which exceeded our expectations."
What's next for American Eagle
While the second-quarter results clearly pleased the market, the real surprise seemed to be the company's outlook.
Management guided for comparable sales to increase in low single digits for both the third and fourth quarters as Schottenstein said: "The fall season is off to a positive start. Fueled by stronger product offerings and the success of recent marketing campaigns with Sydney Sweeney and Travis Kelce, we have seen an uptick in customer awareness, engagement, and comparable sales."
If those campaigns continue their momentum, the company could top its guidance in the second half of the year.
Teen apparel retail stocks have been notoriously volatile, but things seem to be clicking for American Eagle right now, and its share buybacks look poised to pay off.
