Shares of Abercrombie & Fitch soared on Wednesday, even after the retailer slashed its profit outlook due to tariffs, which are expected to hit its business by $50 million.
In a news release, Abercrombie said sales reached a record high for the fiscal first quarter.
“Hollister brands led the performance with growth of 22%, achieving its best ever first quarter net sales, while Abercrombie brands net sales were down 4% against 31% sales growth in 2024.”
For its current quarter, Abercrombie anticipates sales will rise between 3% and 5%, which is in line with expectations of 4.7% growth at the high end, according to LSEG.
During the quarter, sales at Hollister surged 22%, while comparable sales grew 23%.
Even after the retailer cut its profit outlook due to tariffs, which are expected to hit its business by $50 million, Abercrombie and Fitch’s shares surged on Wednesday.
From a range of between $10.40 and $11.40, the company’s current full-year earnings per share are expected to be between $9.50 and $10.50. LSEG reports that analysts were anticipating earnings of $10.33 per share.
Abercrombie also lowered its operating margin projection, which is another indicator that investors pay close attention to. Its operating margin was previously expected to be between 14 and 15 percent, but it is now anticipated to be between 12 and 13 percent.
The estimated effects of current tariffs, such as a 30 percent tariff on Chinese imports and a 10 percent levy on goods from dozens of other nations, are included in the company’s guidance. Other tariffs that are presently on hold are not included.
Despite this, Abercrombie’s stock shot up 25% in premarket trading after the company reported first-quarter earnings and revenue guidance that exceeded Wall Street’s expectations. When Wednesday rolled around, the stock had dropped by almost 49% this year.
Based on a survey of analysts conducted by LSEG, the apparel company’s first-quarter performance was compared to expectations.
$1.59 in earnings per share compared to… $1:39 is anticipated.
Revenue: $1.10 billion for comparison. $1.07 billion is anticipated.
For the three months ending May 3, the company’s reported net income was $80.4 million, or $1.59 per share, as opposed to $114 million, or $2.14 per share, for the same period last year.
Sales increased by roughly 8% to $1.10 billion from $1.02 billion in the previous year. Abercrombie stated in a press release that the fiscal first quarter’s sales hit a record high.
CEO Fran Horowitz said in a statement, “This exceeded our expectations and was bolstered by broad-based growth across our three regions.”. Abercrombie brands’ net sales decreased 4% compared to a 31% increase in 2024, while Hollister brands achieved their highest-ever first-quarter net sales growth of 22%. “.”.
Apart from its profit forecast, Abercrombie increased its full-year sales guidance by a small amount. Previously, it anticipated revenue to increase by 3 to 6 percent, but now it expects it to increase by 3 to 5 percent. According to LSEG, that is significantly higher than the 3–3% growth forecast.
Abercrombie expects sales to increase by 3 to 5 percent for the current quarter, which is consistent with high-end growth projections of 4 to 7%, according to LSEG. According to StreetAccount, the company anticipates an operating margin of 12–13 percent, which is less than the 14–1 percent that is anticipated. It predicts that earnings per share will fall short of the $2.50 target, ranging from $2.10 to $2.30.
Although Abercrombie’s poor forecast mostly reflects the way tariffs will reduce its earnings, the company’s sales are also anticipated to suffer as it struggles with a slowdown at its namesake company. Abercrombie’s historic resurgence over the past few years has been driven by its eponymous chain; however, sales at the brand fell 4% in the first quarter after growing 31% in the same period last year.
Abercrombie’s comparable sales, meanwhile, fell 10-percent.
Sales may be slowing because Abercrombie’s explosive growth has normalized, but they may also indicate that the company is losing market share.
The Hollister brand outperformed its namesake banner by a significant margin. Hollister saw a 22 percent increase in sales during the quarter, while comparable sales increased by 23 percent. Abercrombie’s future growth is anticipated to be driven by the teen-focused chain.
