AEO Q2 Profit Boosted by Tariff Refund, Sales Lag

American Eagle Outfitters reported strong second-quarter earnings, significantly boosted by a substantial tariff refund, though the flagship brand continued to face sales challenges. The company announced revenue of approximately $1.38 billion, an 8% increase year over year, and earnings per share of $0.79. Consolidated comparable sales rose 6%, falling short of analyst expectations. The Aerie and OFFLINE divisions were a standout, with revenue climbing 25% and comparable sales increasing 19%. This strong performance in the intimates and activewear segment helped offset a 1% decline in comparable sales at the American Eagle brand. Management noted sequential improvement in the flagship brand's performance and positive comparable sales for the men's division for the fourth consecutive quarter, but acknowledged ongoing inventory cleanup, particularly in seasonal merchandise, which is expected to continue pressuring margins. A significant factor in the quarter's profitability was a $196 million federal tariff reimbursement, which provided a net benefit of $161 million to operating income.