American Eagle Slips 4% Premarket As BofA Downgrade Flags Tariff Pressure, Aerie Sales Slowdown

American Eagle Outfitters (AEO) shares were down nearly 4% in premarket trading on Monday, after Bank of America downgraded the apparel maker to ‘Underperform’ from ‘Neutral’, citing higher tariffs and lower sales of its activewear brand Aerie.

The company is expected to post second-quarter results on September 3. American Eagle is estimated to report quarterly net revenue of $1.23 billion and earnings per share (EPS) of $0.20, according to data compiled by Fiscal AI.

Retail sentiment on American Eagle remained unchanged in the ‘bearish’ territory, with chatter at ‘extremely low’ levels, according to data from Stocktwits.

Bank of America also lowered its price target on American Eagle to $10 from $11, according to TheFly. The firm cut its fiscal 2025 and fiscal 2026 EPS estimates by 8% and 30%, respectively.

Bank of America added that it is to reflect the impact of higher tariffs and lower Aerie sales. The firm sees a longer path to more normalized earnings in the current environment.

In July, American Eagle announced a new jeans campaign featuring Euphoria star Sydney Sweeney as part of its Fall 2025 campaign. The campaign is titled “Sydney Sweeney Has Great Jeans,” and is part of the company’s marketing efforts to boost sales significantly for its denim brand.

Bank of America noted that the boost from the Sweeney ad push will be offset by higher tariffs. American Eagle’s stock has lost 23% this year and declined 43% in the last 12 months.

Last week, rival Abercrombie (ANF) announced a multi-season partnership with Pittsburgh Steelers linebacker TJ Watt and his wife, former professional soccer player Dani Watt. The company said the first release of the co-designed collection for Abercrombie’s activewear brand, Your Personal Best (YPB), will be available beginning last Thursday.

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