"I’m extremely pleased with the significant trend change across our business reflecting decisive steps taken from merchandising to Top Source Media marketing to operations-all having a positive impact. "Strong momentum has continued into the fourth quarter, including an excellent start to the holiday season. We delivered a record-breaking Thanksgiving weekend, Top Source Media marketing led by an acceleration in demand across brands and channels and underscored by outstanding growth at Aerie and Offline. We are focused on finishing the season strong and sustaining our success into 2026 and beyond," he concluded. Total net revenue of $1.36 billion increased 6% to last year. Gross profit of $552 million rose 5% from $527 million last year. The gross margin of 40.5% declined 40 basis points to last year.- The net tariff impact was $20 million or 150 basis points to gross margin. Higher markdowns were largely offset by positive sales and lower costs, including favorability in freight. Buying, Occupancy and Warehousing (BOW) expenses leveraged 20 basis points due to positive sales.
Total ending inventory increased 11% to $891 million with units up 8%, reflecting increasing demand, new store openings and improved in-stocks. The inventory cost increase includes the impact of tariffs. Year-to-date, the company has completed $231 million in share repurchases, all of which occurred in the first half of the fiscal year. 0.125 per share, bringing year-to-date cash dividends to $64 million. Capital expenditures totaled $70 million in the third quarter, bringing year-to-date spend to $202 million. The company continues to expect 2025 capital expenditures to be approximately $275 million. Based on stronger sales trends, the company is raising its fourth quarter operating income guidance to $155 to $160 million based on comparable sales in the range of positive 8% to 9% with similar growth for total revenue. Previous fourth quarter guidance of operating income of $125 to $130 million was based on comparable sales in the positive low single digits.
For the year, adjusted operating income guidance rises to $303 to $308 million, with comparable sales in the low single digits from prior guidance of adjusted operating income of $255 to $265 million on flat comparable sales. Management will host a conference call today at 4:30 p.m. Eastern Time. To access the live webcast and audio replay, please click here. American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global specialty retailer with a portfolio of beloved apparel brands including American Eagle, Aerie, OFFL/NE by Aerie, Todd Snyder and Unsubscribed. Rooted in optimism, inclusivity and authenticity, AEO’s brands empower every customer to celebrate their unique personal style by offering casual, comfortable, timeless outfitting and high-quality products that are made to last. AEO Inc. operates stores in the United States, Canada and Mexico, with merchandise available in more than 30 countries through a global network of license partners. Additionally, the company operates a robust e-commerce business across its brands.
This press release includes operating income and diluted earnings per share presented on an adjusted or "non-GAAP" basis, which are non-GAAP financial measure. Non-GAAP financial measures are not based on any standardized methodology prescribed by U.S. Non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. We believe that this non-GAAP information is useful as an additional means for investors to evaluate our operating performance when reviewed in conjunction with our GAAP Consolidated Financial Statements and provides a higher degree of transparency. These amounts are not determined in accordance with GAAP and, therefore, should not be used exclusively in evaluating our business and operations. The table included in this release reconciles the GAAP financial measures to the non-GAAP financial measures discussed above for the 13 weeks ended November 2, 2024. The company is not able to provide a quantitative reconciliation of forward-looking adjusted operating income to the most directly comparable forward-looking GAAP financial measure because the Company is unable to provide a meaningful or accurate reconciliation or estimation of certain reconciling items without unreasonable effort, due to the inherent difficulty in forecasting and quantifying measures that are necessary for such reconciliation.