Abercrombie & Fitch (ANF) reported a mixed fiscal second quarter, narrowly surpassing Wall Street's revenue and adjusted earnings per share expectations.
The company's overall sales climbed 7% to $1.21 billion, primarily driven by a robust 19% growth in its teen-focused Hollister brand, which achieved its best-ever Q2 net sales. In contrast, the namesake Abercrombie brand experienced a 5% sales decline, attributed by CEO Fran Horowitz to old inventory markdowns, though she anticipates a return to growth by year-end.
Despite raising its full-year revenue outlook to 5-7% growth, ANF's shares declined as its third-quarter profit guidance and operating margin projections fell significantly below analyst expectations. This weaker profit outlook stems from an anticipated $90 million in full-year tariff costs, nearly double previous estimates, with $25 million impacting the current quarter.
The company is not planning broad price increases to offset these costs. Strategically, ANF is expanding internationally, particularly in Asia-Pacific, and leveraging partnerships like the NFL deal and wholesale expansion for Abercrombie Kids to sustain growth amidst a challenging consumer environment and increased competition.
Originally reported as: “Abercrombie & Fitch Forecasts Continued Growth as Sales Rise”
