AEO Reports Q2 2026 Growth, Shares Drop on Guidance Adjustments

American Eagle Outfitters Inc. (NYSE: AEO) delivered solid financial results for its second quarter fiscal 2026, with revenue rising 8% year-over-year to $1.4 billion, driven by strong performance from its Aerie and OFFLINE sub-brands. Comparable sales increased by 6%, though American Eagle’s core brand saw a 1% decline in same-store sales. The company’s gross margin expanded significantly to 48.7%, up 980 basis points from the prior-year quarter, reflecting improved pricing power and cost management amid a net $179 million benefit from tariff refunds. Operating profit reached $211 million, though SG&A expenses rose to 29.6% of revenue, up 290 basis points year-over-year, as the company scaled operations for its expanding portfolio. Ending inventory grew 14% year-over-year to $817.9 million, though inventory turns dropped to 0.87 from 1.15, signaling potential challenges in working capital efficiency.