AEO Stock Forecast & Price Target

American Eagle Outfitters reported a 5.7% year-over-year increase in total revenues for the third quarter, reaching $1.363 billion, which exceeded both internal estimates and consensus expectations. The company also experienced notable comp growth, with Aerie showing a significant increase of low 20% and overall traffic and average unit retail prices rising as well. Additionally, the operating margin improved by 20 basis points year-over-year to 8.0%, reflecting strong demand and effective management strategies within the company's segments.

American Eagle Outfitters experienced a decline in operating margin of 130 basis points year-over-year to 8.3%, surpassing the prior forecasted decline but still indicating underlying profitability challenges. The gross margin for the third quarter also fell to 40.5%, representing a decrease from 40.9% the previous year, primarily affected by tariff costs that negatively impacted margins by 150 basis points. Additionally, total comparable sales declined by 1% in the quarter, raising concerns about the company's future sales growth and overall financial health.