Dive Brief:

• American Eagle Outfitters Inc. Wednesday said Q2 same-store sales rose 11%, up from 7% year over year.  

• Its 12% revenue increased to $797 million from $711 million year over year, and also beat expectations of $770 million.

• The retailer’s Aerie lingerie brand saw Q2 same-store sales increase 18%, up from 9% year over year.

Dive Insight:

American Eagle’s Q2 report continued the pattern of winners and losers this round, handily outpacing rival Abercrombie & Fitch. Although like Abercrombie the retailer is without a permanent CEO, its efforts to scale back its inventory—to respond more quickly to fashion trends and to avoid huge markdowns—appear to be paying off. The retailer has also been quicker than Abercrombie to eschew the logo-centric clothing that teens appear to be done with. 

Finally, the company’s Aerie lingerie brand is faring well despite the shadow cast by lingerie giant Victoria’s Secret. Aerie’s decision last year to forego Photoshopping its models in its marketing materials cannot be discounted. The brand is capitalizing on its move, and young customers appear to be responding very well. Meanwhile, Victoria's Secret "Perfect Body" campaign last year won it a major protest, and the retailer quietly changed its approach.

"We have seen the backlash," University of Southern California branding and marketing professor Jeetendr Sehdev told Business Insider of Victoria’s Secret ads. "Those perfect bodies are not even the bodies of the ‘Angels.’ And people know that now ... people are fully aware, consciously or subconsciously, whether they are looking at a Photoshopped image."

"What consumers [are looking for] today more than anything else is meaning. And meaning is going to come from relatability — 'can I really relate to this brand? Can I derive enough meaning out of this that it's going to be good for me to engage and pay a premium?" Sehdev also said.