American Eagle Stock Soars 26%. Thank Sydney Sweeney and Travis Kelce.

An American Eagle store in Hong Kong on Aug. 14. (Sawayasu Tsuji/Getty Images)

American Eagle Outfitters stock took off Wednesday, after the apparel retailer reinstated its financial guidance for the fiscal year, giving investors a sunnier outlook than expected.

Shares jumped 26% to $17.15 in Thursday trading. As of Wednesday’s close, the stock was down 18% this year.

The company had withdrawn its forecasts for the full year in May, citing uncertainty about the economy. Its new call projects that adjusted operating income will range from $255 million to $265 million, above the Street’s projections for $176 million. Same-store sales will be approximately flat compared with the prior year, roughly in line with expectations for a 0.2% decline.

American Eagle stock has faced its share of volatility since unveiling its fall denim ad, starring actress Sydney Sweeney, this summer. The ad, which used the tagline “Sydney Sweeney has great jeans,” drew both condemnation and praise.

Some consumers critiqued the ad’s play on jeans and genes, saying it had eugenicist undertones. Others praised it. President Donald Trump said the campaign was the “hottest” out there.

On Wednesday, American Eagle said the fall season was off to a “positive start,” fueled in part by the campaign with Sweeney and a separate partnership with Kansas City Chiefs tight end Travis Kelce. Both campaigns led to an uptick in customer awareness, engagement, and same-store sales, the company said.

That said, the full potential impacts of the campaigns won’t likely be noticeable until the company reports third-quarter results, given that Sweeney’s ad was launched in late July and Kelce’s in late August. The cutoff for the second quarter was Aug. 2.

Indeed, American Eagle’s second-quarter revenue fell 1% year over year to $1.28 billion, compared with the FactSet consensus call for $1.24 billion. Same-store sales fell 1% from last year, but management expects they will be up by low-single digit percentages in the third and fourth quarter, reflecting the marketing improvements.

Earnings of 45 cents per share were more than double the 20 cents analysts were forecasting.

“Overall, we are encouraged by the results and [second half] guidance,” wrote Corey Tarlowe, an analyst at Jefferies, in a note Wednesday, adding that the company’s momentum is expected to continue into the second half of the year. Tarlowe rates the stock a Hold.

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