Letter From Our CEO

May 15, 2026

Jay Schottenstein

Executive Chairman of the Board
and Chief Executive Officer

Dear Fellow Stockholders:

In Fiscal 2025, we faced headwinds, which included unprecedented tariffs and a dynamic consumer environment. In response to an especially challenging first half of Fiscal 2025, our teams moved quickly and decisively to reignite our business. We sharpened the focus on our merchandise, our customers and brands. As a result of these initiatives, the recovery in our business during the second half of Fiscal 2025 was sharp and meaningful.

Our combined actions led to a reacceleration in demand, fueling strong growth in the back half of Fiscal 2025 and enabling a positive finish to the fiscal year. In addition to generating a meaningful top line improvement, we successfully controlled costs, created efficiencies, managed promotions and navigated through a highly dynamic sourcing environment in an effort to minimize the impact of tariffs.

What started as a year of adversity became a period of incredible progress. Fiscal 2025 required disciplined decisionmaking in a year of uneven conditions. The Board and management together acted on cost structure, capital return, and brand investment, and the Company entered Fiscal 2026 with a cleaner operating model and a clear set of priorities for execution. We emerged as a stronger company with enduring brands and an operational platform ready to leverage our momentum and drive profitable growth.

Below are the primary drivers that shaped our performance in Fiscal 2025.

  • Revenue of $5.5 billion rose 4%, marking a new record. Comparable sales increased 3%, on top of 4% last year, with strength across brands.

  • Aerie achieved record revenue on comparable sales growth of 9% on a 5% increase last year. Strength was broad-based across categories including intimates, soft dressing and OFFLINE active wear. Fresh flows of new and exciting collections and a match-back strategy across categories, coupled with product expansion into areas like sleepwear, kept customers engaged. Momentum grew throughout the year, ending with a comparable sales increase of 23% in the fourth quarter. Aerie and OFFLINE are emerging as two of the most exciting brands, and we could not be more enthusiastic about our potential.

  • American Eagle (AE) brand comparable sales were flat following 3% growth last year. We achieved steady progress throughout the year, with significant improvement in the second half, marked by sequential comparable sales increases in the third and fourth quarters. Underpinned by our dominance in denim, we see opportunities to continue strengthening and evolving product offerings across all categories. Strategies aimed to firmly position American Eagle at the center of culture are beginning to yield results. We drove brand engagement, awareness and customer acquisition through attention-grabbing marketing campaigns featuring partnerships with Sydney Sweeney, Travis Kelce and Martha Stewart. We anticipate ongoing improvements and are optimistic about the future of the AE brand.

  • Operating income of $226 million decreased 47% and adjusted operating income(1) of $328 million decreased 26%. Fiscal year adjusted operating income was adversely affected by the challenging first half, as well as an unprecedented increase in tariffs during the second half of the fiscal year. We also made strategic investments in advertising aimed at generating greater brand awareness, largely centered on the AE brand. Despite these factors, I was pleased to see a quick turn in profits during the second half of the fiscal year fueled by growing comparable sales and effective expense management.

  • Strong operating cash flow of $456 million enabled us to invest in growth and return $341 million in cash to stockholders. We spent $261 million in capital expenditures to support the growth of our brands and strengthen operations. The $341 million in cash to stockholders included $85 million in dividends and $256 million in share repurchases.

  • To increase efficiency and focus on high-impact initiatives, we exited our third-party logistics business in the fourth quarter. We believe that this move will generate annual savings and allow us to re-focus investment on our core brands while retaining a significantly enhanced logistics function, including improved warehousing systems, technology, and regional distribution to help ensure speed to customers and support future growth.

“As we look ahead, we remain excited about our long-term opportunity to grow our incredible portfolio of brands. I believe that our team’s determination, focus and creativity will continue to drive us forward.”

As we prepare for our upcoming annual meeting, I would like to inform stockholders that Sujatha Chandrasekaran will conclude her service as a director immediately following the 2026 Annual Meeting of Stockholders. On behalf of the Board and management, we extend our deep gratitude for Suja’s years of dedicated service, guidance and contributions to our governance and growth. As part of our ongoing commitment to strong corporate governance, the Board continues to actively evaluate its composition to ensure that it reflects the skills, experience, and perspectives needed to support our long-term strategies. We are focused on thoughtfully strengthening the Board, including the identification of new directors who bring a wealth of expertise aligned with our future priorities.

As we look ahead, we remain excited about our long-term opportunity to grow our incredible portfolio of brands. I believe that our team’s determination, focus and creativity will continue to drive us forward.

On behalf of our Board of Directors and our entire team, thank you for your continued support and investment in American Eagle Outfitters.

Jay L. Schottenstein
Executive Chairman of the Board and Chief Executive Officer

(1) Adjusted operating income and adjusted operating margin are financial measures that are not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”), which are commonly referred to as non-GAAP or adjusted measures. See Appendix A of this Annual Report for additional detail on and reconciliation of adjusted results and other important information regarding the use of non-GAAP or adjusted measures.