AEO Stock Forecast & Price Target

American Eagle Outfitters Inc. has demonstrated sustained growth, with total comparable store sales increasing by 3% year-over-year, marking a notable performance across multiple quarters. The company's operating margin improved by 50 basis points to 8.9%, surpassing market expectations and reflecting effective cost management as selling, general, and administrative expenses were leveraged positively. Additionally, robust performance in key product categories, particularly within the AE Women’s segment and the Aerie brand, positions the company favorably for continued revenue growth and operating margin expansion in the coming fiscal year.

American Eagle Outfitters has indicated a negative outlook for both the first quarter and full fiscal year, guiding towards a mid-single digit revenue decline year-over-year and low-single digit revenue decline, significantly below previous market consensus. For the fourth quarter, the company's revenue fell approximately 4.4% year-over-year, with projected FY25 operating income estimated between $360 million to $375 million, considerably lower than the prior consensus of $454 million. Despite a flat gross margin of 37.3%, which exceeded expectations due to lower markdowns, the overall financial performance indicates challenges as sales continue to dip, driven by declining comparable store sales and reduced overall revenue expectations.