American Eagle Outfitters Inc (NASDAQ:AEO) stock rises 14.72% (As on December 3, 11:22:40 AM UTC-4, Source: Google Finance) after the company raised its annual comparable sales forecast, betting on marketing-driven demand for its apparel and accessories during the holiday season. Successful marketing campaigns, along with its focus on high-earning consumers, have helped the company fight inflation and a trade policy-driven broader retail slowdown that has impacted discretionary spending among budget-conscious consumers. American Eagle’s “Great Jeans” denim campaign with actress Sydney Sweeney, a tie-up with NFL player Travis Kelce’s clothing brand Tru Kolors, and partnerships with tennis player Coco Gauff and actress Jenna Ortega, helped the company boost demand going into the crucial holiday period.

AEO in the third quarter of FY25 has reported the adjusted earnings per share of 53 cents, beating the analysts’ estimates for the adjusted earnings per share of 44 cents. The company had reported the adjusted revenue growth of 6 percent to $1.36 billion in the third quarter of FY25, beating the analysts’ estimates for revenue of $1.32 billion. Third-quarter comparable sales gained 4%, compared with analysts’ estimates of a 2.4% rise. Its Aerie segment comparable sales jumped 11%, while the bigger American Eagle brand’s comparable sales edged 1% higher. They increased 5% and 3%, respectively, in the same quarter last year. Gross profit rose 5% to $552 million, though gross margin declined slightly by 40 basis points to 40.5%, primarily due to a $20 million tariff impact. Operating profit increased to $113 million compared to $106 million last year. Selling, general and administrative (SG&A) expense of $386 million increased 10% to a rate of 28.4%. The increase was driven by planned investments in advertising, partially offset by leverage in the balance of the expense base. Capital expenditures totaled $70 million in the third quarter, bringing year-to-date spend to $202 million.

American Eagle now sees annual comparable sales rising in the low single digits, compared to its previous expectations of about flat growth. The company also expects current-quarter comparable sales to grow between 8% and 9%, compared with analysts’ estimates of a 2.2% rise, according to data compiled by LSEG. For the full fiscal year, the company now expects adjusted operating income of $303-$308 million, up from its previous guidance of $255-$265 million.

The company expects a $50 million tariff hit in the fourth quarter, compared to previous expectations of between $40 million and $50 million. For fiscal 2025, it sees a tariff impact of about $70 million.