American Eagle Outfitters Inc. (AEO) faces cost pressures from tariffs and supply chain expenses, impacting gross margins. Tariffs are expected to reduce profit by $20 million in Q3 and $40-$50 million in Q4. Despite this, successful marketing campaigns led to record Labor Day results and new customer acquisition.

Positive consumer sentiment and increased purchase intent have been observed for American Eagle, with a focus on denim as a growth driver. The company aims to mitigate tariff impacts through cost-saving strategies while driving traffic with marketing efforts. AEO’s balanced approach targets both margin management and growth for fiscal 2025 and beyond.

AEO’s shares have gained 6.6% YTD, outperforming the industry. With a Zacks Rank of 2 (Buy), the company trades at a lower forward P/E ratio than the industry average. The consensus estimates suggest a decline in current fiscal-year EPS but a rise in next fiscal-year EPS.

Boot Barn Inc. (BOOT) and Amazon.com Inc. (AMZN) also show growth potential, with positive sales and earnings estimates. BOOT has a Zacks Rank of 1 (Strong Buy), while AMZN holds a Zacks Rank of 2. Casey’s General Stores Inc. (CASY) is another company with growth projections and a Zacks Rank of 2.

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Read more at Nasdaq: Tariffs Test Margins, Campaigns Fuel Traffic: Can AEO Balance Both?