Q1: AE Bottoms Challenges Reduce Visibility; Reiterate Neutral.

Research evidence excerpt

Q1: AE Bottoms Challenges Reduce Visibility; Reiterate Neutral.

Investment Thesis

We see near-to-medium-term execution opportunities as the company laps the product missteps in H1'25 and mitigates

tariff headwinds. However, overall, we view margin expansion as top-line reliant. Given recent volatility, lingering consumer

uncertainties/increased competition, and that both AE and Aerie already have achieved meaningful scale, we believe visibility

remains somewhat muted. Further, valuation has run-up, putting multiples slightly ahead of historical averages and the groupCONSUMER average. We look for a more attractive entry point, coupled with better top-line visibility, to become more positive.

Upcoming Catalysts Price Performance

■ Q2 earnings (est. late August/early September) $30RETAIL

■ Reinflection to positive sales growth

$25 ■ Benefits from marketing investments (Sydney Sweeney, Travis Kelce, MarthaAND Stewart) and other brand initiatives $20

■ Benefits from new stores and remodels

■ Continued growth in digital channels $15

■ Future share repurchases $10

$5LIFESTYLE Base Case Assumptions

Jun-25 Jul-25 Aug-25 Sep-25 Oct-25 Nov-25 Dec-25 Jan-26 Feb-26 Mar-26 Apr-26 May-26 ■ Revenues increase 5.4% YoY in 2026, with comps up 5.3% YoY (in-line with guidance

of +MSD%). Revenues grow 3.1% YoY in 2027 AEOS&P 500 (rebased)

■ GM expands ~160 bps YoY in 2026, primarily driven by the lapping of inventory Source: FactSet

writedowns from Q1'25, partially offset by incremental tariff headwinds throughBRANDS early Q3. GM expands ~10 bps YoY in 2026 Company Description

■ SG&A deleverages ~70 bps YoY in 2026, as increased marketing investments that

American Eagle Outfitters, Inc. is a began LY are not fully lapped until H2. SG&A leverages ~40 bps YoY in 2027