AMERICAN EAGLE OUTFITTERS INC

Macroeconomic Conditions

During Fiscal 2024 and the 13 and 26 weeks ended August 2, 2025, our results were negatively impacted by macro-economic challenges and global inflationary pressures impacting consumer spending behavior, which constrained revenue and increased margin pressure to clear through excess spring and summer inventory.

After a challenging spring season, second quarter demand increased as the quarter progressed. Top-line improvement, coupled with lower than expected promotional activity, enabled us to stabilize margins and deliver operating income slightly ahead of last year for the 13 weeks ended August 2, 2025.

In addition, recent changes in legislative and regulatory developments, including tariffs and other trade policies, have introduced additional uncertainty in the global economy. For example, in April 2025, the U.S. government imposed a new tariff and trade policy and has subsequently announced various updates to its tariff policy. The imposition of tariffs by the U.S. government, associated geopolitical tensions, including retaliatory tariffs by trading partners, and uncertainties regarding tariffs have and may further affect our margins and operations or could lead to further weakened business conditions for our industry. We continue to evaluate the impact of tariffs and other trade policies on our business.

For further information about the risks associated with global economic conditions and the effect of economic pressures on our business, see "Risk Factors" in Part I, Item 1A of our Fiscal 2024 Form 10-K.

Omni-Channel Capabilities

The Company operates stores in the United States, Canada and Mexico, with merchandise available in more than 30 countries through a global network of license partners. Additionally, the company operates a robust e-commerce business across its brands.

Over the past several years, we have invested in building our technologies and digital capabilities. We focused our investments in three key areas: making significant advances in mobile technology, investing in digital marketing and improving the digital customer experience.