American Eagle Outfitters is navigating a transition year as Aerie's strong growth offsets tariff pressure and uneven demand at the American Eagle brand. Aerie's first-quarter fiscal 2026 revenues rose 34% year over year to $480.8 million, with comparable sales up 25%, while the American Eagle brand saw revenues and comparable sales decline 2%. The company's fiscal 2026 outlook assumes a 10% tariff rate on second-quarter receipts and 15% for the back half, contributing to a 150- to 200-basis-point gross margin impact in the second quarter. Total ending inventory increased 27% at cost in the first quarter, driven mainly by tariffs and a prior-year write-down, while SG&A expenses rose 11% due to higher advertising investments. AEO is also investing in supply chain improvements, including a new Phoenix distribution center, and winding down third-party fulfillment to improve agility and profitability.
American Eagle Outfitters IncTariffs expected to cause 150-200 bps gross margin impact in Q2.
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