06:30 AM EDT, 09/04/2025 (MT Newswires) -- American Eagle Outfitters ( AEO ) shares soared early Thursday as the clothing retailer's fiscal second-quarter earnings unexpectedly increased year over year, while revenue topped market estimates amid higher demand and expense management.

The company posted net income of $0.45 a share for the quarter ended Aug. 2, up from $0.39 the year before, it said late Wednesday. The consensus on FactSet was for a decline in EPS to $0.20. Revenue ticked down 1% to $1.28 billion, but came in above the Street's view for $1.24 billion.

The stock jumped 23% in the most recent premarket activity.

"We were pleased to see an improvement in the business during the second quarter driven by higher demand, lower promotions and well-managed expenses, all of which exceeded our expectations," Chief Executive Jay Schottenstein said in a statement. "The actions we have taken to better align inventory and strengthen execution laid the groundwork for our results this quarter."

Consolidated comparable sales were down 1% in the quarter. "A lower average unit price was largely offset by growth in transactions benefiting from positive traffic across selling channels," Chief Financial Officer Michael Mathias said during an earnings call, according to a FactSet transcript. The company saw demand accelerate as the quarter progressed, Mathias added.

By brand, Aerie revenue grew to $429.1 million from $415.6 million in the prior-year quarter, while its comparable sales rose 3%, amid positive demand across a number of major categories, Creative Director Jennifer Foyle said on the call. American Eagle revenue fell to $800.4 million from $827.6 million, while comparable sales slipped 3%, although demand improved throughout the quarter, according to Foyle.

For the third and fourth quarters, the retailer anticipates overall comparable sales to increase by a low-single digit. "The third quarter is off to a better start with quarter-to-date consolidated (comparables) up in the mid-single digits," Mathias told analysts. The company estimates incremental tariffs to cost about $20 million in the ongoing three-month period and anticipates a $40 million to $50 million impact in the subsequent quarter, the CFO said.

"With respect to tariffs, we will begin to feel the impact in the second half," Schottenstein said on the call. American Eagle Outfitters ( AEO ) is "using all levers" to mitigate tariff increases and has taken measures to "assure manufacturing options are in place in countries that make the most sense for our business moving forward," Schottenstein added.

US President Donald Trump has reportedly filed an appeal with the Supreme Court to uphold his reciprocal tariffs after the US Court of Appeals for the Federal Circuit ruled last week that most of them are illegal.

For fiscal 2025, American Eagle Outfitters ( AEO ) expects comparable sales to be flat on a yearly basis.