American Eagle counts new customers after Sydney Sweeney ad frenzy and shares soar

Key Points

• American Eagle Outfitters saw a 31% increase in shares after a successful ad campaign featuring Sydney Sweeney, which attracted new customers and boosted brand awareness.
• Despite facing criticism for its ad campaign, American Eagle reported record-breaking customer acquisition and plans to continue leveraging Sweeney's partnership into the second half of the year.
• The company predicts same-store sales will be flat this year but expects a low single-digit percentage increase in the third and fourth quarters, indicating improved momentum.
• American Eagle's stock value has increased by 6% this year, reflecting investor confidence following the positive reception of its marketing efforts.

Shares of American Eagle Outfitters spiked 34% Thursday after the teen clothing retailer said the frenzy surrounding its Sydney Sweeney ad campaign drew new customers during its most recent quarter.

American Eagle rolled out its new new ad campaign starring 27-year-old actor over the summer. The fall denim campaign sparked a debate about race, Western beauty standards, and the backlash to “woke” American politics and culture.

Negative reactions centered on ads that used the word “genes” instead of “jeans” featuring the blonde-haired, blue-eyed actor known for the HBO series “Euphoria” and “White Lotus.”

But American Eagle did get noticed, executives said late Wednesday in a call after the Pittsburgh retailer posted second quarter earnings.

“We saw a record-breaking new customer acquisition and brand awareness cutting across age, demographics and genders,” said CEO Jay Schottenstein.

Traffic built up throughout the second quarter and continued into August, he said.

The company now expects comparable-store sales to rise by low single-digit percentages in the third and fourth quarters. The company withdrew its outlook for the year this spring citing volatility from the chaotic global economic situation. But it said Wednesday that same-store sales should be flat this year with the bump.

American Eagle did say that its brand also benefitted from a new ad campaign featuring newly engaged NFL star Travis Kelce.

American Eagle said the campaign was always about its clothing and not race when responding to criticism. A month later retail rival The Gap put out its own ad featuring girl group KATSEYE. That ad received some praise for its inclusivity.

Gap CEO Richard Dickson, speaking Thursday at a Goldman Sachs global retail conference in New York City, said its “Better in Denim” campaign received 400 million total views and in three days had more views than the brand’s four prior ads combined.

“I think when the industry creates campaigns that are talked about, it generates interest in the industry, ” Dickson said in an interview with The Associated Press. “Our current campaign, Better in Denim, is a great example of that.”

Neil Saunders, managing director of GlobalData, wrote that the frenzy around the Sweeney campaign is something of a "tempest in a teacup.”

“While it generated strong reactions, it ultimately had no serious detrimental impact on sales,” he said. “Indeed, guidance for the second half points to improved momentum, supported by both the denim marketing and the ongoing Travis Kelce partnership.”

And attention from the Sweeney campaign doesn't seem to have hurt the brand.

“Regardless of the merits of the collaborations, making more noise is exactly what American Eagle needs to do to cut through and regain ground among consumers for whom it has slipped off the radar, Saunders explained.

For the second quarter, American Eagle's revenue dipped 1% to $1.28 billion.

Chief Marketing Officer Craig Brommers said Wednesday that the Sweeney ad campaign will continue.

“Sydney will be part of our team as we get into the back half of the year and we’ll be introducing new elements of the campaign as we continue forward,” he said.

Shares of American Eagle Outfitters Inc. are up 10% this year with the latest surge.

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—-AP Retail Writer Anne D'Innocenzio in New York contributed to this report.