Kelly

Kelly asked why American Eagle's high-profile marketing campaigns didn't seem to benefit the AE brand as much as Aerie, and sought clarification on the expected net tariff impact of $50 million in Q4, specifically if this figure is indicative for the first half of 2026, and if like-for-like pricing is assumed.

Answer

President and Executive Creative Director Jen Foyle explained that marketing often has a halo effect, and AE is now seeing results, especially as in-stocks improved. Executive Chairman and CEO Jay Schottenstein added that loyalty members increased significantly, and specific denim styles sold out quickly. CFO Mike Mathias detailed expected tariff impacts for Q1 and Q2 2026 (approx. $25M-$30M each), and Q3 2026 (approx. $35M-$40M), noting the company does not have a specific strategy to pass tariff impacts directly to customers but optimizes pricing within its value equation.

Kelly asked why American Eagle's high-profile marketing campaigns didn't translate into more direct benefit for the AE brand compared to Aerie, and sought clarification on the expected net tariff impact for the first half of 2026 and the company's pricing strategy.

Answer

President and Executive Creative Director Jen Foyle explained a 'halo effect' from marketing, noting a turnaround in men's and acceleration in women's denim as in-stocks improved. Executive Chairman and CEO Jay Schottenstein added that loyalty members increased significantly. CFO Mike Mathias projected a $25-$30 million tariff impact for Q1 and Q2 next year, totaling $40-$60 million for the first half, and stated the company is not purposely passing tariffs to consumers but taking strategic price 'shots' while maintaining AUR flat.