Abercrombie & Fitch gross sales development slowed once more in its fiscal second quarter because the attire firm struggles to high the surge it loved final fiscal yr.
Through the quarter, gross sales on the namesake Abercrombie model fell 5% whereas comparable gross sales dropped 11%.
However the success of teen-focused Hollister model helped to salvage the quarter. Total, Abercrombie & Fitch gross sales climbed 7%, led by 19% development at Hollister – the model’s best-ever second-quarter internet gross sales development, the corporate stated. Comparable gross sales throughout the enterprise rose 3%, led by Hollister, which additionally noticed comparable gross sales develop 19%.
Abercrombie narrowly beat Wall Road expectations on the highest and backside traces. The corporate additionally hiked its full-year income outlook and now expects gross sales to climb 5% to 7%, in contrast with earlier steering of three% to six% development. A lot of that vary would high Wall Road expectations of 5.2% development, in accordance with LSEG.
Shares fell almost 4% in premarket buying and selling.
This is how the corporate did in its second fiscal quarter in contrast with what Wall Road was anticipating, based mostly on a survey of analysts by LSEG:
- Earnings per share: $2.32 adjusted vs. $2.30 anticipated
- Income: $1.21 billion vs. $1.20 billion anticipated
The corporate’s reported internet revenue for the three-month interval that ended August 2 was $141 million, or $2.91 per share, in contrast with $133 million, or $2.50 a share, a yr earlier. Excluding the affect of a good litigation settlement, Abercrombie noticed earnings of $2.32 per share.
Gross sales rose to $1.21 billion, up about 7% from $1.13 billion a yr earlier.
“We entered the second half of 2025 on offense,” CEO Fran Horowitz stated in a information launch. “We’re growing our full yr internet gross sales outlook, reflecting our robust positioning and development trajectory, constructing on report 2024 outcomes. Our staff stays centered on delivering for our prospects whereas investing to capitalize on the numerous, long-term alternatives for our world manufacturers.”
For its present quarter, Abercrombie’s additionally gave a better-than-expected gross sales outlook. It anticipates income will rise between 5% and seven%, beating expectations of 4.3% development, in accordance with LSEG.
In the meantime, its revenue outlook for the fiscal third quarter is weaker than anticipated. The corporate anticipates earnings per share shall be between $2.05 and $2.25, far under expectations of $2.53, in accordance with LSEG.
Abercrombie stated it expects its working margin, a intently watched metric on Wall Road, to be between 11% and 12% throughout its present quarter, additionally decrease than Wall Road expectations of 13.3%, in accordance with StreetAccount.
For the total yr, Abercrombie tightened its earnings outlook and now expects earnings per share to be between $10.00 and $10.50. That compares with a earlier vary of $9.50 to $10.50 per share.
Abercrombie’s steering incorporates about $90 million in internet tariff prices – almost double what it beforehand anticipated. When it introduced fiscal first quarter earnings in Could, Abercrombie stated it was anticipating a $70 million hit from tariffs that it might cut back to $50 million by means of mitigation.
On the time, President Donald Trump’s so-called reciprocal tariffs have been held at 10% throughout a lot of the globe. However now Abercrombie faces increased duties on items from Vietnam, Cambodia and India, key manufacturing areas for the corporate.
On the time, the corporate stated it wasn’t planning broad worth will increase as a part of its mitigation efforts. It is unclear if Abercrombie will change that stance now that tariffs have elevated throughout Asia.
Abercrombie & Fitch, as soon as a forgotten mall model, has been on a rocket ship of development over the previous few years. However the surge has began to gradual at its namesake banner.
The corporate has turned to new classes, equivalent to attire, athleisure and bridal, to stimulate development. It is also working to broaden internationally and lean on partnerships.
On Monday, the corporate introduced it might be the NFL’s first “official trend companion” – a multiyear deal that can embody private styling for athletes, athlete-led campaigns and player-designed attire. The partnership comes after Abercrombie launched an assortment of NFL licensed merchandise in 2022, a class that has carried out properly for the corporate.
It has teamed up with star gamers like Christian McCaffrey, Tee Higgins and CeeDee Lamb to promote the partnership and designed limited-edition co-designed attire that shall be obtainable on the market in the course of the upcoming season.
The partnership displays the steps retailers are taking to make sure they will proceed to develop gross sales and keep related with shoppers at a time when buyers are pulling again on nice-to-have gadgets like new garments and equipment. Opponents like Levi, American Eagle and Hole have teamed up with celebrities in latest advertising and marketing campaigns forward of the again to highschool and fall procuring seasons.
Nonetheless, the slowdown raises questions on how the model will develop within the quarters forward, particularly as competitors continues to warmth up, stated Neil Saunders, managing director of GlobalData, in a observe.
“Higher numbers… will most likely come by means of because the prior yr comparatives begin to ease, however additionally they should be engineered by the corporate. We imagine there are some good initiatives in play right here, together with the abroad enlargement of the model,” stated Saunders. “Our latest channel checks at new shops in London have been all constructive, though we imagine the shops can attain a better potential as soon as the buyer economic system within the UK strengthens.”‘
Internationally, Abercrombie’s efforts to broaden are paying off in some elements of the world. Through the quarter, gross sales in its Asia Pacific area grew 12%, whereas comparable gross sales climbed 3%. That was offset by a slowdown in Europe, the Center East and Africa, the place gross sales slid 1% and comparable gross sales have been down 5%.
Abercrombie has additionally began to broaden into wholesale for its Abercrombie Children model. The corporate has a really small share of the general market, which was price $82.1 billion final yr, Saunders stated.
“This leaves appreciable headroom for development,” stated Saunders. “Increasing by means of wholesale is a wise technique: it supplies comparatively quick entry to new prospects and requires far much less capital than opening further shops – of which Abercrombie Children nonetheless has comparatively few.”
