Retailers are navigating a complex landscape marked by shifting consumer preferences and economic uncertainties, prompting them to adapt strategies for sustained growth. Amid these challenges, American Eagle Outfitters, Inc. ( AEO ) has shown resilience by outperforming financial expectations, even as broader market trends pose ongoing hurdles.

American Eagle shares are trading lower on Thursday, a day after the company reported better-than-expected financial results for the second quarter.

American Eagle beat analyst estimates on the top and bottom lines in the second quarter, reporting revenue of $1.28 billion versus estimates of $1.24 billion, and earnings per share of 45 cents versus estimates of 20 cents.

Also Read: American Eagle Stock Is Soaring Thursday: Here’s Why

American Eagle said it expects comparable sales growth in the low single-digit range for both the third and fourth quarters.

Here are the analysts’ takes on the earnings report:

Telsey Advisory Group

Analyst Dana Telsey reiterated the Market Perform rating, raising the price target from $12 to $18.

Telsey noted that after a rough FY24 and weak first quarter, American Eagle showed recovery signs in the second quarter with results topping expectations.

Although sales fell for a fourth straight quarter, the decline eased by over 400 bps, helped by Aerie’s growth.

Gross margin beat forecasts, expenses stayed in check, and operating income more than doubled projections, driving the earnings beat.

Telsey said management appears to have fixed earlier missteps, improving the back-half outlook, though sustaining relevance outside peak seasons remains a challenge.

The analyst added that while recent campaigns lifted brand engagement and comps, maintaining momentum is uncertain, and American Eagle Outfitters’ comps remain down YoY, offsetting Aerie’s gains.

The analyst projects the fourth quarter tariff impact to be between $40 million-$50 million.

These numbers significantly outperform the “unmitigated impact” of $180 million, as the company successfully rebalanced its assortments and supply chain, negotiated vendor costs, optimized shipping between air and ocean freight, and implemented some pricing adjustments.

Telsey said that after reviewing the second-quarter results, updated guidance, and the current business momentum, American Eagle is now expected to deliver flat full-year revenue of about $5.334 billion, up 0.1% year over year.

This compares with the retailer’s prior forecast of a 2.6% decline to $5.189 billion.

Telsey also raised its FY25 EPS estimate to $1.13 from $0.91 previously.

Bank Of America Securities

Analyst Christopher Nardone reiterated the Underperform rating, raising the price target from $10 to $11.

Nardone estimated that the tariff impact for FY25 is about $70 million, or 140 basis points, and could rise to $125 million–$150 million, or roughly 250 basis points, next year.

For FY26, the net effect is expected to be heavier in the first half, with around a 350 basis point hit, which may cap margin improvement given just 1% forecast sales growth and limited pricing flexibility for both brands.

Nardone added that if recent sales momentum continues, fixed cost leverage could help offset tariff pressure and support margins.

AEO Price Action: American Eagle Outfitters ( AEO ) shares were up 34.08% at $18.26 at the time of publication on Thursday. The stock is trading within its 52-week range of $9.27 to $22.63, according to Benzinga Pro data.

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