American Eagle Outfitters reported a mixed fiscal first quarter, highlighting a significant divergence in performance between its two primary brands. While the company managed to beat overall revenue expectations with $1.20 billion in sales, the performance of its namesake American Eagle banner fell short of projections. Comparable sales for the core brand declined by 2%, missing analyst expectations of 3% growth, despite a high-profile marketing campaign featuring actress Sydney Sweeney.

In contrast, the company’s intimates brand, Aerie, continues to be a major growth engine. Aerie saw comparable sales surge by 25% during the quarter, significantly outperforming expectations of 19.1%. This strong showing helped the company achieve a net income of $23.53 million, a notable turnaround from the $64.90 million loss reported during the same period last year. However, the market reacted negatively to the core brand’s stagnation, with shares dropping more than 10% in extended trading.

Company leadership attributed the namesake brand’s struggles primarily to missteps in the women’s bottoms category, noting an imbalance in product inventory. CEO Jay Schottenstein and President Jennifer Foyle emphasized that the company is taking immediate steps to refine its product assortment and shift marketing strategies. Moving forward, the retailer plans to pivot its advertising spend toward digital media and social influencers to improve conversion rates ahead of the critical back-to-school shopping season.

Despite the near-term headwinds and broader macroeconomic uncertainty, American Eagle has maintained its full-year guidance. The company remains optimistic about consumer spending power and is focusing on operational excellence to drive long-term value. For the second quarter, management anticipates mid-to-high single-digit growth in comparable sales as they work to align their inventory more closely with current consumer demand.