Shares of American Eagle Outfitters have experienced a significant increase, rising 25% in late trading after the company announced that celebrity partnerships with Sydney Sweeney and Travis Kelce are anticipated to enhance sales. CEO Jay Schottenstein reported that the firm’s second-quarter results exceeded expectations, and he expressed optimism about ongoing sales growth driven by successful marketing initiatives.
Despite a 1% decline in sales from May to July and a previous 5% dip, executives noted that they expect growth in the coming months in the “low single digits” as demand for products, including denim and underwear, is expected to rise. Schottenstein indicated that the fall season had begun positively, attributing this to the recent marketing efforts featuring Sweeney and Kelce.
The controversial “Great Jeans” advertisement, which showcased Sweeney, sparked debates over race and beauty standards. In the ad, Sweeney remarked on genetic traits, which led to criticism regarding perceptions of eugenics. American Eagle defended the ad’s focus on denim, stating its goal was to rejuvenate the brand amidst declining sales.
The advertisement gained significant visibility, drawing around 40 billion impressions and contributing to a rapid sell-out of the featured jeans. The attention also extended to the political arena, with comments from public figures, including President Donald Trump, who expressed support for Sweeney.
Additionally, American Eagle cautioned that tariffs are expected to contribute about $70 million in costs during the latter half of the financial year. However, the company stated that, through negotiations and adjustments in sourcing, they have managed to reduce these costs significantly, while also planning to raise some prices without relying primarily on price increases to address tariff impacts.
Source: https://www.bbc.com/news/articles/cddm7z3p2vlo?at_medium=RSS&at_campaign=rss