Shares of American Eagle Enterprises jumped more than 15% on Monday. This increase came on the heels of former President Donald Trump endorsing the company’s new marketing blitz, featuring a campaign with actress Sydney Sweeney. The stock skyrocketed immediately after Trump announced his bid for the presidency on the campaign via his own social media platform, Truth Social. This unexpected boost comes amid a challenging financial landscape for the retailer, which has recently faced declining sales and operational hurdles.
American Eagle’s stock, which had been struggling throughout the year, was down more than 27% as of Friday’s close. Things have taken a turn on the sales front for the company. It’s announced a huge write-down of $75 million for its spring and summer goods. American Eagle just withdrew its full-year guidance. This decision is the result of continued economic pressures including highly promotional discounting strategies and a destabilized macroeconomic picture.
For its current quarter, American Eagle expects a revenue drop of around 5%. They forecast a 3% decrease in same-store sales. The company’s gross margin is expected to be down versus last year. Despite these challenges, American Eagle’s operating income for the second quarter is expected to fall between $40 million and $45 million.
The new marketing campaign with Sweeney at its helm has certainly had its share of trials and tribulations. Advocates have accused it of being sexist and out of touch. Still, that campaign caught Trump’s endorsement, who tweeted, “Sydney Sweeney, a real life Republican, has the ‘HOTTEST’ ad on earth. It’s for American Eagle, and the jeans are ‘flying off the shelves.’ Go get ’em Sydney!” Recent months suggest that his endorsement truly ignited a bonfire of renewed interest in American Eagle’s product.
American Eagle’s campaign includes the tagline, “Euphoria, has good jeans,” taking full advantage of Sweeney’s association with the hit TV series “Euphoria.” The brand aims to leverage Sweeney’s rising star power to attract a younger demographic, despite facing backlash over the campaign’s perceived messaging.
Even with the recent stock run-up that’s more due to meme stock mania than to address any of these issues, the huge financial issues still concern investors. The company’s shift in strategy and focus on marketing partnerships reflects an effort to rejuvenate its brand image while navigating a complex retail environment.