American Eagle sticks to annual sales forecast again, shares slump

Demand for apparel has remained uneven as stubborn inflation and macroeconomic uncertainty prompt shoppers to focus on essentials such as gas and groceries and wait for promotions before buying clothing and accessories.

U.S. consumer sentiment deteriorated in August and retail sales fell for the first time in nine months in July, reflecting pressures on lower- and middle-income households that hunt for value and cut budgets, even as affluent shoppers keep up spending on discretionary items.

American Eagle, like peers such as Gap, has been navigating challenges including weakness in certain seasonal categories in the last few months.

"American Eagle continues to struggle as our experts have pointed out a less-clear brand voice and merchandising strategies ... AE falls behind the likes of Levi's and Abercrombie," said Patrick Ricciardi, analyst at Third Bridge.

The company, which maintained its fiscal 2026 comparable sales forecast for the second time this year, still expects it to be up mid-single digits.

American Eagle posted quarterly revenue of $1.38 billion, edging past analysts' estimates of $1.37 billion, according to data compiled by LSEG.

American Eagle raised its operating income target after including the impact of $196 million in tariff refunds received during the second quarter.

"We have seen a little pressure on seasonal ideas in American Eagle," said Jennifer Foyle, executive creative director at American Eagle and Aerie, adding that the company continues to see some of that pressure going into the third quarter and is working on right-sizing inventory.

The broader apparel sector has seen mixed demand patterns, with some retailers struggling to anticipate shifting fashion trends and changing customer preferences.