American Eagle profits surge 60% despite sales misses

American Eagle reported a significant profit increase of nearly 60% despite missing sales targets for the second consecutive quarter. The company's revenue rose to $1.29 billion, an 8% increase from the previous year, aided by a calendar shift that contributed an additional $55 million to sales. The intimates line Aerie and the American Eagle brand both experienced revenue growth, with Aerie up 9% and the main brand up 8%. The gross margin improved to 38.6%, reflecting favorable product costs, although it remains unclear if this led to lower prices for consumers. For the upcoming quarter, American Eagle anticipates comparable sales growth of 3% to 4%, slightly better than analysts' expectations. The company aims for a 4% increase in comparable sales for the year, with total revenue projected to rise by 2% to 3%. CEO Jay Schottenstein expressed optimism about the company's future, highlighting a strategic plan to double the business from $5 billion to $10 billion over the next few years. The company is committed to investing in this growth strategy, which includes boosting sales by 3% to 5% annually and achieving an operating margin of around 10%. American Eagle's leadership is also focusing on expanding its product offerings, particularly in women's and denim categories, while the menswear segment shows signs of recovery. The brand is adapting to new trends and preparing for a strong performance in the latter half of the year.