American Eagle has the ‘consumer’s attention’ with celeb collabs

Yahoo Finance Video and Julie Hyman

December 4, 2025

In this video:

AEO

-0.84%

American Eagle Outfitters (AEO) stock is jumping on Wednesday after beating third quarter estimates on the top and bottom lines, while the retail brand also raised its fourth quarter forecast.

BTIG consumer retail & lifestyle brands analyst and managing director Janine Stichter talks with Julie Hyman about American Eagle’s sales figures across its brands, which was boosted by celebrity promotions with Sydney Sweeney, Travis Kelce, and Marth Stewart.

To watch more expert insights and analysis on the latest market action, check out more Market Catalysts.

Video Transcript

00:00 Speaker A

American Eagle shares popping after it beat Wall Street’s estimates for the third quarter and raised its forecast. American Eagle expecting fourth quarter sales to grow between 8 and 9%, well above the around 2% that was expected. Even so, my next guest reiterated a neutral rating on the stock. Let’s talk about why and what’s next for the company. Janine Stichter is here with us, BTIG consumer retail and lifestyle brands analyst and managing director. Thank you so much for being here. Um, so just sort of like big picture, what did you think of the quarter for um, American Eagle?

00:46 Janine Stichter

I think the acceleration that they’re seeing in the top line is really a positive surprise. Um, from what we’ve heard across the industry, Black Friday and the start to holiday has been good, but they really saw a market acceleration. They guided for Q uh comps up high single digits. We’ve been looking for kind of a low single digit and it’s just really trending better than expected. So I think this is all positive momentum. Um the question around this just becomes the durability and the sustainability of this momentum that they’re seeing right now.

01:21 Speaker A

And obviously American Eagle is also trying to sort of tap into the zeitgeist in various ways with celebrity spokes people, right? We got Travis Kelsey, we got Sydney Sweeny, we got Martha Stewart. Um how much do you think that is juicing sales for the brand?

01:43 Janine Stichter

Yeah, I think that’s exactly what investors and the market are trying to parse out right now. And they had a really tough start to the year and then all of a sudden, as you got towards the end of Q2 into early Q3, things started to get better. and a lot of that coincided with the Sydney Sweeney campaign. Travis Kelsey came right after that, and now we have Martha Stewart helping them to kick off the holidays. So I think it’s really hard to separate how much is just buzz around the brand from some really high profile campaigns very different from what they’ve done in the past, versus how much is better product and better execution. And it seems like they’ve attracted a lot of new customers, particularly online from these campaigns. But the question we have going forward is, do these consumers actually stay with the brand and continue to shop with American Eagle?

02:37 Speaker A

And I guess that will depend more on product assortment, quality, all of that kind of thing.

02:46 Janine Stichter

I think it’s exactly that. Um from here now they have the consumer’s attention. That was the goal of these marketing campaigns. and now the onus is really on them to continue to execute around product.

03:00 Speaker A

Who are these new customers that they’re drawing in, Janine?

03:05 Janine Stichter

I think it’s broad. Um the interesting thing with Sydney Sweeney is that, you know, while she is a a female celebrity, I think she actually does have a bit of a male audience that follows her. and they did see the men’s business accelerate in Q3. Um part of that was probably Travis Kelsey as well. With um the Martha Stewart campaign, which is relatively new, I think the interesting thing there is, you know, you don’t think of her as necessarily someone who resonates with the younger consumer. But it sounds like she actually is really helping to attract Gen Z because she does have a certain uh resonance with Gen Z that she’s built over the last few years as she’s kind of re-emerged as a um a Gen Z celebrity.

03:52 Speaker A

I would not have picked that on my 2000 bingo card or whatever. Um so it sounds like you’re a little bit cautious here. The shares are up already 45% this year, even given um and I should say including the action that we’re seeing today. So, it sounds like you want those questions answered before you would go to a buy on the stock.

04:22 Janine Stichter

Yeah, I think it’s exactly that. Um I think that they’ve definitely put the product issues of the first half of the year in the rear view mirror. There’s a lot of good things going on from a marketing and product standpoint. But when we sit here with the stock having had a big bump after Q2 and now another nice run after Q3, the multiples are at the top upper end of historical averages. They’re above a lot of their peers. Um I feel like the estimates haven’t come up a lot today are are reasonable, but there might not be a lot of upside there. So I think we kind of need to see how sustainable this is to get excited at these valuation levels.

05:03 Speaker A

What’s also interesting to me is you got these celebrity campaigns that are um to do with American Eagle itself and denim, etc. But the Aerie brand is kind of killing it here. Um comps there up 11%. And this is if I’m not mistaken, this has been a pretty consistent area for them, right?

05:33 Janine Stichter

It has been for the most part. The one area where they stumbled was similar to the American Eagle brand, in the start of the year they had some product execution misses and they actually comp negative for the first time in in recent history at that brand. but it seems like those issues are fixed. And then I think the marketing campaigns that they had mostly for American Eagle did have some level of halo effect to the Aerie brand as well because if you look at where the upside was, American Eagle did improve, but a lot of it actually was from Aerie which um, you know, it sounds like quarter to date is comping up probably in the 20% range.

06:17 Speaker A

When you look at direct competitors to American Eagle, I guess I mean I mostly think of Abercrombie, I guess, although I’m sure there’s a lot of online brands that compete directly too. Do you think those are more attractive right now?

06:33 Janine Stichter

We think Abercrombie, we have a buy rating on Abercrombie and we think it’s more attractive just because of where valuation fits. You have American Eagle trading at call it 13, 14 times, whereas Abercrombie is more like eight or nine times. Um and I think there there’s a lot of questions around the potential for improvement at the Abercrombie brand after they’ve had kind of a rough start of the year. And then with Hollister, we think that the growth there is underappreciated. So I think there’s more opportunity Abercrombie from a stock perspective. I do think both of these companies are executing well right now.

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