American Eagle Outfitters (NYSE:AEO) lifted its fourth-quarter operating income guidance after reporting strong holiday-season trading, but the update failed to reassure investors.
Shares of the apparel retailer fell about 9.7% in premarket trading on Monday, despite the improved forecast.
The company now expects fourth-quarter operating income to come in between $167 million and $170 million, up from its prior guidance range of $155 million to $160 million. The upgrade follows positive sales momentum across brands and sales channels.
American Eagle said comparable sales for the fourth quarter to date, through January 3, 2026, are running up in the high single digits. Within that, the American Eagle brand delivered low single-digit comparable growth, while Aerie significantly outperformed, posting comparable sales growth in the low twenties.
Management said the stronger outlook is underpinned by solid margin performance and reflects expectations for consolidated comparable sales growth of roughly 8% to 9%. The company also reiterated that its fourth-quarter operating income guidance factors in around $50 million of tariff-related headwinds, as previously disclosed.
Commenting on recent performance, Jay Schottenstein, Executive Chairman and Chief Executive Officer of AEO Inc., said: “Momentum continued in the fourth quarter with record December sales fueled by the power of our brands, with particularly strong growth at Aerie and Offline and sequential growth at American Eagle.”
Schottenstein added that shoppers responded positively to new product launches and recent marketing campaigns, with demand remaining strong even after the holiday period.