American Eagle soars as teen clothing retailer embraces Sydney Sweeney frenzy

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Shares of American Eagle Outfitters spiked 31% at the opening bell 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 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 campaign was praised for being inclusive.

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

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.

The company's stock jumped more than 24% in premarket trading.

Shares of American Eagle Outfitters Inc. are up 6% this year with the latest surge.