American Eagle Outfitters, Inc.: 1Q26 Review: Aerie Gains Share as AE Brand Struggles

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American Eagle Outfitters, Inc.: 1Q26 Review: Aerie Gains Share as AE Brand Struggles

Barclays | American Eagle Outfitters, Inc.

marketing, bottoms including denim have since returned to underperformance. Further, we

believe it may prove challenging for the AE brand to anniversary its high-profile marketing

campaigns and drive earnings growth in 2H26 as they annivesary Sydney Sweeney and Travis

Kelce campaigns. Our positive view of the Aerie brand is offset by our cautious view on AE, and

as such, we remain EW. In reaction to the earnings on 5/28/26, AEO shares traded in the

aftermarket -12.1% vs SPX flat.

Tariff Exposure Update. Ending inventory units were up +5% while inventory at cost was up

+27% due to incremental tariffs along with lapping a 1Q25 inventory write-down. Management

noted that inventory would have been up closer to the +HSD range excluding those two items.

2Q26 guidance includes a $20mn tariff headwind, equating to about 150bps to 200bps of GM

pressure. FY26 guidance incorporates a 10% tariff rate in 2Q26 and a 15% tariff rate for the

balance of the year. The company has applied for ~$190mn in tariff refunds and expects a

~$140mn net cash benefit, with the company already having received a gross amount of over

$100mn (net ~$75mn after selling a portion of it as a receivable). However, management noted

tariff refunds are not factored into guidance.

Quarter in review. 1Q26 adjusted EPS of $0.14 beat consensus of $0.12, driven by a slight sales

beat, along with lower OpEx rate and lower tax rate. Revenue of $1.20bn came in just above

consensus of $1.19bn. Total comparable sales increased +8% (vs. consensus +8.5%), which

includes Aerie comp sales of +25% (vs. consensus +19.1%) and American Eagle comp sales of

-2% (vs. consensus +2.7%).