Stocks in American Eagle jumped over 15% on Monday following praise for the retailer’s ad campaign featuring actress Sydney Sweeney by President Donald Trump.
Trump’s Truth Social Post Boosts Shares
“Sydney Sweeney, a registered Republican, has the ‘HOTTEST’ ad out there. It’s for American Eagle, and the jeans are ‘flying off the shelves.’ Go get ’em Sydney!” Trump wrote on his social media site Truth Social not long after markets opened.
Shortly after Trump’s post, shares of American Eagle surged, and were still trading about 18% higher in early afternoon trading. Monday’s gains come a little over a week after American Eagle first announced that the “Euphoria” star would headline its fall marketing campaign with the slogan: “Sydney Sweeney has great jeans.”
From Meme Stock Surge to Political Firestorm
Early on, the stock jumped in what seemed to be a fit of meme stock madness, but in the last week, the company’s shares have been lower as American Eagle has come under attack over the campaign. That decline reversed itself on Monday when Trump entered the conversation.
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In the run-up to American Eagle’s promotion with Sweeney, the retailer has been struggling to increase sales, and the advertising onslaught is part of the numerous initiatives it’s undertaking to turn that negative tide.
The slogan American Eagle chose for the campaign “Sydney Sweeney has great jeans” has led some far-left critics to say the remark was a double entendre. Instead of being about pants, it was really about the actress’s genetics and the fact that she has blonde hair and blue eyes, critics said. The ad also faced pushback more widely for being overly sexualized and out of touch, reminiscent of previous marketing norms that many say no longer resonate with the public.
American Eagle’s Response to Backlash
American Eagle has stayed largely quiet on the matter releasing a brief statement on its Instagram account on Friday that said the slogan “is and always was about the jeans.”
“We’ll continue to celebrate how everyone wears their AE jeans with confidence, their way,” the company said. “Great jeans look good on everyone.”
The saga highlights the tightrope that marketers are walking when deciding what types of ads to run and the audiences they should be targeting when consumer attention is harder than ever to win and maintain. Bud Lite’s ill-fated Dylan Mulvaney collaboration and the subsequent impact on its sales and stock price, highlighted how things can go wrong when companies release marketing that some may consider “woke.”
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On the other hand, American Eagle’s campaign is now showing the other side of that coin – what can happen when a company releases marketing that isn’t “woke” and perhaps more accepted on the cultural right.
In the leadup to American Eagle’s campaign with Sweeney, the company has been struggling to grow sales, and the marketing blitz is one of the many things it’s doing to reverse that negative slump.
Search Popularity Reaches Record Highs
It’s too soon to tell whether the campaign has helped or hurt sales, but it has caused American Eagle to become more top of mind among consumers. Google trend information indicates search interest in American Eagle is at an all-time high in over 20 years. Whether that search interest will result in increased shoppers purchasing jeans through American Eagle will become more evident when the retailer releases earnings, something that should occur in the coming weeks.
Through Friday’s close, American Eagle shares had declined over 27% year-to-date as the retailer struggles with bigger macroeconomic issues surrounding tariffs, consumer discretionary spending and its own merchandising blunders.
Quarterly Performance and Write-Offs
The company announced in January that it would have to write off $75 million of spring and summer merchandise after its full-year guidance was withdrawn on account of weak sales, deep discounting and an uncertain macroeconomic environment.
For its latest quarter, American Eagle reported in May that revenue would decline 5%, comparable sales would be off 3% and gross margin would be down from last year. Operating income in the second quarter will be in the range of $40 million to $45 million.
