What American Eagle Outfitters, Inc. told the SEC could break it.

Because American Eagle imports substantially all of its merchandise, tariffs directly raised its costs: $70 million of incremental tariffs (net of mitigation) cut Fiscal 2025 gross profit. The landscape is volatile — the U.S. Supreme Court struck down the IEEPA 10% baseline tariff on Feb 20, 2026, but other tariffs remain and a new 150-day 10% Section 122 global tariff took effect Feb 24, 2026 — keeping AEO's input costs uncertain.

“The decrease in gross profit was driven by a decrease of $30 million in merchandise margin due to increased promotional activity and $70 million of incremental tariffs, net of mitigation efforts, as well as an inventory charge taken in the first quarter of Fiscal 2025 related to the write-down of spring and summer merchandise.”

American Eagle designs its merchandise but has it made by third-party factories, sourcing substantially all of it from non-North American suppliers concentrated primarily in Asia (no single factory/supplier exceeds 10%); this overseas, import-dependent supply base exposes it to tariffs, customs/trade-law changes, shipping disruptions and Asian regional risk, even though vendor diversification limits single-supplier failure.

“During Fiscal 2025, we purchased substantially all of our merchandise from non-North American suppliers. We sourced merchandise through vendors located throughout the world, primarily in Asia, and did not source more than 10% of our merchandise from any single factory or supplier.”