Remember when we used to joke that celebrity endorsements were just expensive ways to burn marketing budgets? Well, American Eagle Outfitters (NYSE: AEO) just proved us all wrong – and their shareholders are laughing all the way to the bank.
The clothing retailer’s stock absolutely exploded 35% on Thursday, making it the day’s best performer. The secret sauce? Two words: Sydney Sweeney. (Okay, and Travis Kelce, but let’s be honest – Sydney’s the real MVP here.)
The Sweeney Effect Is Real
Here’s where it gets fun. AEO’s “iconic fall denim campaign” featuring the Euphoria star didn’t just look good on Instagram – it actually moved the needle. CEO Jay Schottenstein couldn’t contain his excitement on the earnings call, gushing about “record breaking new customer acquisition” that cut across age groups and genders.
But here’s the kicker: Sweeney’s signature jeans sold out in a week. Some products? Gone in a day. Her curated “Syd’s Picks” collection has been flying off the virtual shelves faster than you can say “Gen Z fashion icon.”
And because one celebrity apparently wasn’t enough, they threw Travis Kelce into the mix with his “True Colors” collaboration. Because nothing says “I understand modern marketing” like pairing America’s sweetheart with America’s tight end.
The Numbers Don’t Lie
Now, before you think this is all marketing fluff, let’s talk brass tacks. AEO’s Q2 earnings were actually pretty solid:
- Revenue hit $1.28 billion (down 1% year-over-year, but still beat estimates of $1.23B)
- Earnings jumped 15% to 45 cents per share, absolutely crushing the expected 20 cents
- Gross margins improved by 30 basis points to 38.9%
Sure, comparable sales dropped 1%, but that’s mostly because they lowered prices by about 5%. Sometimes you’ve got to spend money to make money – and in this case, it worked.
Wall Street’s Take
The Street is buying what AEO is selling. UBS bumped their price target to $21.50 and slapped a buy rating on it. At $18 per share after Thursday’s surge, the stock is still trading at a P/E of just 13 and a price-to-sales ratio of 0.49. Translation: it’s still cheap.
The company expects comparable sales to actually rise in Q3 and Q4, and they’re not done with the Sweeney magic. CMO Craig Brommers made it clear the campaign “is not going anywhere,” with new elements coming soon.
The Bottom Line
In a world where most celebrity partnerships feel like expensive vanity projects, AEO actually cracked the code. They found the right celebrity, at the right time, with the right product. And their stock price is the proof.
Sometimes the market rewards companies that just… get it. Today, American Eagle got it. And Sydney Sweeney? She just proved that the right celebrity can still move mountains – or at least stock prices.