Sydney Sweeney Ad Boosts American Eagle’s Stock 30%

Topline

Shares of American Eagle soared as trading opened Thursday, after the retailer boasted the success of its controversial ads featuring Sydney Sweeney while reporting second-quarter earnings that surpassed Wall Street’s expectations.

The retailer said ads starring sweeney, praised by President Donald Trump amid broader controversy, are “not going anywhere.”

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Key Facts

American Eagle’s shares jumped by about 30% shortly after trading opened to around $17,70, pacing what would be the stock’s largest-ever single-day gain.

On Wednesday, American Eagle reported Q2 revenue of $1.28 billion and earnings per share of $0.45, besting economist estimates of $1.23 billion and $0.20, according to FactSet.

CEO Jay Schottenstein said in a statement the company was “fueled” by the success of recent marketing campaigns with Sweeney, including an “uptick in customer awareness, engagement and comparable sales” as American Eagle enters its third financial quarter.

Jennifer Foyle, American Eagle’s president and executive creative director, told investors Wednesday the company gained 700,000 new customers in its latest quarter and that traffic has been “consistently positive” throughout August.

American Eagle’s “Sydney Sweeney Has Great Jeans” ad campaign is “not going anywhere,” CMO Craig Brommers said in the retailer’s earnings call, adding, “Sydney will be part of our team as we get into the back half of the year, and we’ll be introducing new elements of the campaign as we continue forward.”

Big Number

20.4%. That’s how much American Eagle’s shares have declined this year so far, despite recent rallies sparked by the company’s ad campaign with Sweeney and some meme stock craze surrounding the retailer.

Key Background

American Eagle launched its “Sydney Sweeney Has Great Jeans” ad campaign in late July near the end of the retailer’s second quarter. In a marketing video, Sweeney wears a pair of American Eagle jeans and a denim jacket while making a pun on the words “jeans” and “genes,” saying, “Genes are passed down from parents to offspring, often determining traits like hair color, personality, and even eye color. My jeans are blue.” The ad campaign sparked backlash from social media users who argued the marketing came close to promoting eugenics, suggesting American Eagle was implying Sweeney’s blonde hair and blue eyes were more desirable than other traits. President Donald Trump praised Sweeney’s marketing stint and said American Eagle’s jeans were “flying off the shelves.” The retailer has defended its ad campaign, saying in a statement the marketing is “and always was about the jeans.”