Sydney Sweeney Ad Boosts American Eagle's Sales, Stock Surges
Launched in July, its 'Sydney Sweeney has great jeans' campaign faced swift backlash, with some accusing the company of referencing eugenics.
American Eagle Outfitters Inc. wanted Sydney Sweeney to be a brand reset. It worked.
On Wednesday, after the market close, the apparel company reported higher-than-expected quarterly sales and cited the success of its controversial marketing campaign featuring the actress, which ignited a social media firestorm.
“In just six weeks, the campaign has generated unprecedented new customer acquisition,” Chief Marketing Officer Craig Brommers said in a call with analysts. He said the company gained new shoppers in “every single county in the US” and saw sellouts of Sweeney’s signature jeans.
“This momentum is national and it is pervasive,” he said.
American Eagle shares surged as much as 28% Thursday in premarket trading. If that gain holds, the stock would be set for its biggest rise since 2000. The shares had declined 18% this year through Wednesday.
For the quarter ended Aug. 2, American Eagle reported same-store sales down 1%, surpassing the average analyst estimate compiled by Bloomberg. Revenue also outpaced expectations.
Positive Start
The fall season is “off to a positive start,” Chief Executive Officer Jay Schottenstein said in a statement.
“Fueled by stronger product offerings and the success of recent marketing campaigns with Sydney Sweeney and Travis Kelce, we have seen an uptick in customer awareness, engagement and comparable sales,” he said. The company said it plans to continue its work with Sweeney and would release a second drop of its collection with Kelce.
Citi analyst Paul Lejuez pointed to a turnaround at Aerie, the company’s brand focused on intimates and comfy clothes. The unit, which makes up about a third of revenue, returned to growth as same-store sales rose 3%. Wall Street expected a decline of 3.3%.
Management said the buzz surrounding the Sweeney and Kelce campaigns could be helping Aerie’s sales because it shares a web platform with American Eagle, according to Lejuez.
Outlook Provided
The Pittsburgh, Pennsylvania-based company also provided an outlook for the fiscal year after withdrawing it in May. It said it expects comparable sales to be approximately flat and gross margin to be down year over year.
The company said it expects its mitigated tariff impact to be $20 million this quarter, and between $40 million to $50 million in the fourth quarter.
American Eagle has faced steep competition from rivals including Gap Inc., Levi Strauss & Co. and Abercrombie & Fitch Co., with sales falling for four quarters straight on an annual basis.
Great Jeans
The apparel company has tried to reignite excitement with buzzy, celebrity-driven ads.
Launched in July, its “Sydney Sweeney has great jeans” campaign faced swift backlash, with some accusing the company of referencing eugenics. The attention captured the interest of President Donald Trump, who called it the “HOTTEST ad out there” in a post on Truth Social.
Shortly after news of Kelce’s engagement to pop star and billionaire Taylor Swift broke, American Eagle announced a collaboration with his brand Tru Kolors.
Despite the success American Eagle attributed to the Sweeney ad, weekly year-over-year sales growth has slowed since around the July 23 launch, similar to trends from competitors, according to credit and debit card transaction data compiled by Bloomberg Second Measure.
Overall, sales “remain weak” at American Eagle but the business is regaining traction, said Neil Saunders, managing director of GlobalData.
“The controversy around the Sydney Sweeney denim campaign proved to be something of a tempest in a teacup,” he said. “While it generated strong reactions, it ultimately had no serious detrimental impact on sales. Indeed, guidance for the second half points to improved momentum.”
