PITTSBURGH — American Eagle Outfitters shares plunged as much as 11% Wednesday after the retailer's second-quarter results revealed that a headline-beating profit was propped up almost entirely by a one-time tariff refund, masking a slowdown at its namesake brand.

The company reported adjusted earnings of 79 cents a share, topping analyst estimates, with revenue rising 8% year-over-year to $1.4 billion, according to Investing.com. On the surface, it looked like a clean win.

A Tariff Refund Did the Heavy Lifting

The numbers told a different story underneath. American Eagle booked $196 million in IEEPA tariff refunds, including interest, with a $161 million net benefit flowing directly into operating income — which jumped to $211 million from $103 million a year earlier, according to the company's own second-quarter earnings release. Strip out the refund, and the underlying operating performance was far weaker than the headline suggested.

THE BEAT WAS ARTIFICIAL.

Consolidated comparable sales rose 6%, but the growth was concentrated almost entirely in the company's Aerie and OFFLINE brands, which posted comp gains between 19% and 25%, according to Benzinga. Comparable sales at the flagship American Eagle brand actually fell 1%. Inventory also swelled 14% year-over-year, raising concerns among analysts about potential markdowns ahead.

Investors appeared most spooked by the company's full-year operating income guidance of $540 million to $550 million, which fell short of expectations that the tariff windfall might signal broader momentum. Instead, the guidance suggested the core brand's struggles are likely to persist into the back half of the year.

The stock's slide underscores a recurring theme this earnings season: one-time accounting benefits, including trade-related refunds, have increasingly complicated efforts by investors to gauge retailers' genuine underlying health heading into the holiday shopping season.