Shares in clothing company American Eagle have surged after a controversial ad featuring Sydney Sweeney backed by President Donald Trump and his MAGA base – though actual sales are slightly down.
Shares in the company rose by almost a quarter overnight (23.5 per cent), equivalent to around a $500 million bump in market value.
Sales between May and July actually fell to $1.28 billion, slightly down from $1.29 billion the year before, according to its second quarter earnings released Wednesday.
However the company comfortably beat revenue estimates of $1.23bn with the firm’s second-highest ever for the second quarter of the year. The Sweeney ad launched on July 23, right at the end of the quarter so the true impact on sales may not be seen until the next sales report.
The Europhia actress made waves with her participation in the much-debated ad, which highlighted Sweeney’s physical appearance by saying she “has great jeans” in a play on “genes”.
While critics accused the ad of playing into eugenic ideals, that some genetic qualities are better than others, MAGA supporters quickly came to her defense.
Trump praised Sweeney when he found out she was a registered Republican, writing on social media she “has the ‘HOTTEST’ ad out there.”
Share price rises are not entirely linked to product sales. In this instance, an improving profit margin would have contributed toward investor confidence, as well as the announcement of a share buyback from the company. Store closures of 35-40 American Eagle locations by the end of the year would also contribute to reduced costs that investors will have welcomed.
And with American Eagle stock at around $16.50, it is still some distance off last October’s price of $22 a share, and more than 55 per cent down from earlier highs in 2021 when the price reached near $38.
Nevertheless, the company celebrated the latest financial figures and the Sweeney campaign after Wednesday’s announcement.
“The fall season is off to a positive start,” American Eagle CEO Jay Schottenstein said. “Fueled by stronger product offerings and the success of recent marketing campaigns with Sydney Sweeney and Travis Kelce, we have seen an uptick in customer awareness, engagement and comparable sales.”
CNN reported that executive creative director, Jennifer Foyle, added during the call: “The (Sweeney and Kelce) campaigns combined have generated a staggering 40 billion impressions as we look ahead, our plan to build on this momentum.”
Despite the controversy around the ad, the company has maintained it “is and always was about the jeans.”
“We’ll continue to celebrate how everyone wears their AE jeans with confidence, their way,” American Eagle said in a previous statement. “Great jeans look good on everyone.”
However American Eagle has warned that, regardless of the president’s support for the advert, Trump’s tariffs look set to have a negative impact on business.
The company said on Wednesday it expects tariff impacts to be $20m in the third quarter and up to $50m in the fourth, CNN reports.
