American Eagle's Gen Z Playbook Is Working — Sydney Sweeney And Travis Kelce Might Only Be The Opening Act

• Gen Z, along with Gen Alpha, is expected to account for 40% of fashion spending within the next decade, according to data from Boston Consulting Group and Women’s Wear Daily (WWD) report in late October.
• American Eagle on Tuesday said that by collaborating with high-profile partners who are defining culture, “we are attracting more customers and have more eyes on the brand than ever before.” 
• The company has claimed that the Sydney Sweeney and Travis Kelce partnerships have garnered more than 44 billion impressions.

When American Eagle Outfitters initially announced a campaign with Sydney Sweeney in July, little did the company know it would become Gen Z’s go-to brand or that its stock would soar nearly 85% since the partnership, setting it on course to undo a terrible 2024.

Well, did American Eagle stop at that? No, the apparel maker went all out within a month to partner with NFL star Travis Kelce. The partnership, announced in August, came a day after Kelce and billionaire pop singer Taylor Swift announced their engagement in an Instagram post.

Apparel makers, especially those that have suffered greatly during the pandemic, have turned to brand marketing and invested in advertising through celebrity tie-ups to boost their portfolios and attract consumers, focusing on Gen Z, which is slowly becoming the largest share of shoppers in the United States.

Gen Z: The Driving Force

Gen Z, along with Gen Alpha, is expected to account for 40% of fashion spending within the next decade, according to data from Boston Consulting Group and Women’s Wear Daily (WWD) report in late October.

“Younger consumers represent one of the most powerful spending forces in fashion, yet they are also the hardest to win and keep,” says Mrin Nayak, a BCG managing director and partner, and a coauthor of the report.

Nayak outlined that their shopping patterns are fluid and unpredictable, driven by a search for brands that reflect their values and identities while remaining culturally relevant. “Winning them over represents a defining opportunity for brands to build long-term loyalty,” he said.

American Eagle on Tuesday said that by collaborating with high-profile partners who are defining culture, “we are attracting more customers and have more eyes on the brand than ever before.” 

The company noted that together, the Sydney Sweeney and Travis Kelce partnerships have garnered more than 44 billion impressions.

Sweeney's Tie-Up A 'Euphoria' For AEO

In July, Sweeney, well-known for her roles in "Anyone But You," "Euphoria," and "The White Lotus," teamed up with American Eagle for "Sydney Sweeney Has Great Jeans." The brand partnership was aimed at showcasing a return to denim during a time when customers are also turning heavily to cargos and chinos for their wardrobe.

Sweeney is today considered one of the most influential celebrities, particularly among the younger generation, for her notable roles in Netflix series and rom-coms.

The campaign launched a limited-edition denim jacket inspired by Sweeney's on-set style and introduced "The Sydney Jean," a limited-run take on the fan-favorite Dreamy Drape franchise, produced in collaboration with Sweeney.

The Travis Kelce Effect

In August, the company launched a limited-edition brand collaboration, AE x Tru Kolors, Kelce's sportswear and lifestyle clothing line. The product line-up included reimagined varsity jackets, cricket sweaters, rugby polos, and utility cargos, as well as soft chenille pieces and cashmere sets.

This new partnership with Kansas City Chiefs star Kelce saw products launch in two drops on Aug. 27 and Sept. 24, with the collection featuring more than 90 pieces priced between $14.95 and $179.95 — a price range that appeals to a wide range of shoppers, including Gen Z, according to retail analysts.

Since Kelce's partnership with AEO, the stock has jumped over 71%, building on the momentum it has gained since Sweeney's collaboration.

AEO Knows The Tie-Ups Are Working

On Tuesday, during the post-earnings call, CEO Jay Schottenstein said the company's better-than-expected third-quarter results benefited from the success of recent marketing campaigns, which drove engagement and attracted new customers. 

"We are encouraged by the impact of the campaigns and collaborations with Sydney Sweeney and Travis Kelce, and now holiday gifting with Martha Stewart," Schottenstein said.

President and Executive Creative Director of American Eagle & Aerie, Jennifer Foyle, said denim has been robust, particularly in women's. The company saw acceleration throughout the quarter, getting into the back half of the third quarter and into Black Friday. "It's been our number one Black Friday as far as denim is concerned. The jeans are certainly winning for us, and as you know, that's our key competency business," she said.

"And we did have some out-of-stocks, particularly in women's in [the] third quarter. Sydney Sweeney certainly accelerated some of that, and we needed to move swiftly to get back into business."

AEO Now Trying To Keep Up With Demand

Schottenstein said that the jeans that the company had made specifically for Sydney Sweeney, they sold out within two days. “They boomed right out right away,” he said. 

“With the launch of the Sydney Sweeney [campaign] and actually, Travis, we couldn't really keep up with that demand,” Foyle said.

Retail sentiment on American Eagle improved to ‘extremely bullish’ territory from ‘bullish’ six months ago. Message volumes on the stock were at ‘extremely high’ levels (94/100), a huge improvement from three months ago when volumes were at ‘low’ levels (37/100), according to data from Stocktwits.

A user on Stocktwits noted that the stock was on track to hit $50.

Shares of AEO have gained nearly 25% this year, outperforming rivals Abercrombie & Fitch (down 33%) and Gap, Inc. (nearly 14% jump). 

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Also See: Nasdaq, S&P 500 Futures Point To Steady Open: Why CAPR, MRVL, AEO, GTLB, CRWD Are On Traders' Radar

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