Abercrombie & Fitch (NYSE:ANF) shares closed 14.67% higher at US$88.47 on Wednesday, after the retailer posted stronger-than-expected first-quarter results and raised its sales outlook—despite slashing profit guidance due to mounting tariff costs.
Strong quarter lifts market confidence
The clothing company reported earnings of US$1.59 per share, beating analyst forecasts of US$1.39, while revenue rose 8% year-on-year to a record US$1.10bn. Comparable sales increased 4%, with particularly strong performance from its Hollister brand, where sales surged 22% and comp sales jumped 23%. In contrast, sales at the Abercrombie label fell 4%, reflecting tough comparisons with last year’s launch of its wedding shop.
“This was above our expectations and was supported by broad-based growth across our three regions,” said CEO Fran Horowitz. “Hollister brands led the performance with growth of 22%, achieving its best ever first quarter net sales.”
Tariffs drive guidance cut
Despite the sales beat, Abercrombie lowered its full-year earnings forecast to a range of US$9.50 to US$10.50 per share, down from its previous US$10.40–US$11.40 range. The company expects to absorb about US$50mn in tariff-related costs this year—primarily due to a 30% tariff on imports from China and a 10% levy on goods from other countries.
Operating margin guidance was also trimmed, now expected to fall between 12.5% and 13.5%, down from 14–15%. The company said it is working with suppliers to offset costs and diversify sourcing, noting that Chinese imports now make up only a small portion of its inventory.
“We’re looking for expense reductions … across the business, but we’re doing that with a very clear eye to protecting long-term investments,” CFO Robert Ball told CNBC.
Sales outlook lifted amid Hollister momentum
Abercrombie raised its full-year sales growth forecast slightly, now projecting 3% to 6% revenue growth, up from 3% to 5%. For the second quarter, it expects sales to grow between 3% and 5%, with EPS between US$2.10 and US$2.30, short of analyst expectations.
While Abercrombie’s namesake brand struggled amid heavier discounting and tough seasonal comps, the company hopes to return to growth in the back half of the year. In the meantime, Hollister’s renewed appeal among teens—particularly for retro styles—remains a key growth engine.
The company’s performance was well-received by investors, reversing a year-to-date slide of nearly 50% entering the session.
