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Research Alert: American Eagle Beats Estimates; Reiterates Full Year Guidance

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CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

AEO delivered Q1 2026 revenue of $1.195B (+9.7% Y/Y), $10M above estimates, and operating income of $28M versus an $85M loss in the prior year. Gross margin expanded 860 bps to 38.2%, primarily driven by comparison against last year's $75M inventory writedown. Aerie achieved exceptional performance with 25% comparable sales growth and surpassed $2B in trailing 12-month revenue, fueled by compelling products and successful campaigns. Management reiterated FY 2026 operating income guidance of $390-410M while expecting mid single digit comparable sales growth, with tariff assumptions of 10% for Q2 and 15% for the back half built into guidance. However, American Eagle brand faced headwinds with 2% comparable sales decline, highlighting the portfolio's reliance on Aerie's momentum. We view the 27% inventory increase concerning given only 5% unit growth, suggesting potential margin pressure from cost inflation and tariff impacts ahead.

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