Sydney Sweeney and Other Celebs Fueled American Eagle Stock’s Rally. Can Earnings Keep It Going?

American Eagle’s high-profile marketing campaign featuring actress Sydney Sweeney. (Michael M. Santiago/Getty Images)

Key Points

• American Eagle’s shares have increased by over 20% this year, with marketing campaigns featuring celebrities contributing to improved sales.
• Analysts anticipate American Eagle to report adjusted earnings of 44 cents per share on $1.3 billion in revenue for the third quarter.
• Same-store sales are projected to rise by 2.4% from a year ago, an acceleration from the 1% decline in the second quarter.

American Eagle’s high-profile marketing campaigns featuring celebrities like Sydney Sweeney and Travis Kelce have helped improve the retailer’s sales and boost shares by more than 20% this year.

The company’s third-quarter earnings report, due Tuesday afternoon, could keep the rally going.

Analysts polled by FactSet expect American Eagle to post adjusted earnings of 44 cents a share on $1.3 billion in revenue.

Same-store sales are projected to rise by 2.4% from a year ago, accelerating from the second quarter’s 1% decline. The improvement reflects the success of American Eagle’s recent marketing campaigns featuring Sweeney, Kelce, and, most recently, Martha Stewart.

Those collaborations drove foot traffic and sales toward the end of the second quarter, and the momentum likely continued into the third quarter with a strong back-to-school season, wrote Adrienne Yih, an analyst at Barclays.

Margins could be the report’s weak spot, analysts say. Tariff costs, rolling discounts, and the celebrity-filled marketing campaigns mean that gross margins may be compressed this quarter.

But it is likely the company has already embedded those costs into its guidance, wrote Jay Sole, an analyst at UBS. The company pulled its annual outlook earlier this year to account for macroeconomic uncertainty, and didn’t reinstate it until the second quarter.

American Eagle stock is up about 27% this year; however, most of those gains were notched in the wake of the company’s September earnings report, which suggested the celebrity marketing campaigns paid off. The stock closed 4.2% higher on Monday.

Before then, shares were off 18%, reflecting investors’ concerns about trade policy and how consumers would respond to the company’s denim ad that starred Sweeney. The campaign, which used the tagline “Sydney Sweeney has great jeans,” drew both condemnation and praise, with some consumers critiquing the ad’s play on the words “jeans” and “genes,” saying it had eugenicist undertones. Others praised it. President Donald Trump said it was “the ‘hottest’ ad out there.”

The company has turned to Stewart for its “Give Great Jeans” holiday campaign. Investors will be tuning into the company’s earnings call later today for updates on how the fourth quarter is shaping up.

Write to Sabrina Escobar at sabrina.escobar@barrons.com