American Eagle Outfitters Inc. (NYSE: AEO) has posted consecutive earnings beats. Yet even after delivering another better-than-expected quarter on May 28, shares sold off as concerns about weakness in the core American Eagle brand and pressure on second-quarter gross margin overshadowed stellar performance at Aerie.
Since then, the stock has recovered its losses. Where shares head next is likely to depend on Aerie's ability to maintain its momentum after posting 25% comparable sales growth, whether the American Eagle brand can regain its footing, and how much pressure tariffs and other costs ultimately place on margins.
