Abercrombie & Fitch Co. (NYSE:ANF) Surpasses Q2 Earnings and Revenue Estimates

Abercrombie & Fitch Co. (NYSE:ANF) delivered a robust second quarter performance for fiscal 2025, surpassing analyst expectations on both revenue and earnings per share. The company reported net sales of $1.21 billion, a 7% increase compared to the same period last year, exceeding the consensus estimate of $1.20 billion. Adjusted earnings per share came in at $2.32, slightly above the projected $2.30, demonstrating continued operational strength despite a challenging retail environment.

Key Financial Highlights

• Revenue Performance: Total sales reached $1.21 billion, marking the eleventh consecutive quarter of growth. This was primarily driven by strong performance in the Americas, which saw an 8% increase, and the APAC region, which grew by 12%. However, the EMEA segment experienced a slight decline of 1%.

• Brand Performance: The Hollister brand was a standout, achieving its best-ever second quarter with net sales surging 19%, largely fueled by robust back-to-school and summer demand. In contrast, the Abercrombie brands saw a 5% decline in net sales, partly due to lapping a 26% growth from the prior year.

• Profitability: The company reported a GAAP operating margin of 17.1%, which included a $39 million benefit from a litigation settlement. Excluding this one-time item, the adjusted operating margin was 13.9%, still exceeding the company’s own outlook. Net income per diluted share on an adjusted basis was $2.32, compared to $2.50 in the prior year.

Market Reaction and Outlook

Following the earnings release, the stock showed mixed reactions in pre-market trading, with a slight decline of approximately 0.76%. Over the past month, the stock has remained relatively flat, reflecting investor caution amid broader market uncertainties. However, the company’s updated full-year guidance may provide renewed confidence. Abercrombie now expects net sales growth in the range of 5% to 7%, up from the previous forecast of 3% to 6%. The adjusted operating margin is projected to be between 13.0% and 13.5%, with earnings per share anticipated to range from $10.00 to $10.50.

For the third quarter, the company anticipates net sales growth of 5% to 7% and an operating margin between 11% and 12%. This outlook incorporates an estimated $90 million impact from net tariff costs, which management has factored into their projections. The company’s ability to navigate these headwinds while still projecting growth underscores its resilient business model and effective strategic initiatives.

Strategic Initiatives and Capital Allocation

Management emphasized their focus on inventory management and customer engagement, particularly through digital and omnichannel strategies. During the quarter, the company repurchased $50 million worth of shares, continuing its commitment to returning value to shareholders. With a remaining share repurchase authorization of $1.05 billion, Abercrombie is well-positioned to continue this strategy opportunistically.

The company also plans to expand its physical footprint with approximately 40 net store openings for the full year, alongside remodels and right-sizing efforts to optimize the store portfolio. These investments are aimed at enhancing the customer experience and driving long-term growth.

Conclusion

Abercrombie & Fitch’s second quarter results reflect a company successfully executing its growth strategy despite external challenges. The outperformance in revenue and earnings, coupled with raised guidance, suggests underlying strength in its operations. However, investors will be closely monitoring the performance of the Abercrombie brands and the impact of tariff costs on future profitability.

For more detailed earnings data and analyst estimates, visit the earnings page for ANF.

Disclaimer: This article is not investment advice. Please conduct your own research and consider consulting a financial advisor before making any investment decisions.