American Eagle Outfitters (AEO) spent
more money on running its corporate operations and marketing during the first quarter of 2026, primarily due to a deliberate decision to increase its advertising budget.
Selling, general and
administrative (SG&A) expenses came to $376 million. While planned advertising investments partially drove the increase, the company spent $376 million on overhead costs — 11% more than the
company spent during the same three-month period last year.
The corporate strategy is shifting more toward performance advertising to offset any sales slump at American Eagle.
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In the most recent financial quarter, the
American Eagle brand saw its comparable sales slide by 2%, while its sister brand Aerie soared with a record 25% increase in comparable sales for the spring period.
AEO CFO Michael Mathias announced during the
company’s earnings call last week that its profit cycle has been influenced by ad investments.
To course-correct American Eagle’s recent drop, AEO is aggressively shifting its back-half
dollars away from broad awareness and heavily toward digital media, performance marketing, and influencer traffic drivers, Mathias explained during the company’s earnings call.
For example, Sydney Sweeney’s campaign for American Eagle, one of the company’s many
brands, relied heavily on performance advertising. While the campaign was branded under creative taglines like “Great Jeans” in 2025, and “Syd for Short” in 2026, the underlying digital strategy was built strictly on
performance-driven metrics, customer acquisition, and conversion tracking, according to American Eagle CFO Craig Brommers.
American Eagle, the brand, deployed
targeted videos that optimized for social commerce conversion on platforms such as Snapchat and Instagram. The company also used AI.
The follow-up “Syd for Short,” which ran in April, resulted in a trackable 9% surge in American Eagle’s stock price immediately after the
digital ads went live, according to one
report.
Company-wide marketing investments at American Eagles Outfitters now focus on new influencer programs, digital and performance initiatives and strict product quality and
authenticity, with engagement up across established and new customers.
Operating income for the full year 2026 is projected to be between $390 million and $410 million, with inventory levels
actively managed to support new assortments and seasonality changes.
In Q2 2026, the company guided investors to between $45 million to $50 million for the quarter with guidance that
includes a $20 million incremental tariff and SG&A up in the mid-teens for ongoing advertising investments.
For the full year, the company expects operating profit of between
$390 million to $410 million based on consolidated comparable sales growth in the mid single digits.
In the second half of the year, the company plans to cycle tariffs and investments
in advertising that began mid-year 2025.
The announcement regarding the shift in advertising was made during the company’s Q1 fiscal 2026 earnings conference call.
