Abercrombie & Fitch reports ‘record’ sales, cuts earnings outlook due to tariffs
Abercrombie & Fitch Co. reported strong top-line growth in its first quarter fueled by surging sales at Hollister.
The apparel retailer forecast further sales gains for the year even as it slashed its profit outlook and cut its operating margin forecast. Abercrombie expects tariffs currently in effect to reduce its earnings by $50 million.
Abercrombie’s net income fell 29.4% to $80.4 million, with earnings per share of $1.59, for the quarter ended May 3, compared with $114 million, or $2.14 per share, a year earlier. Analysts had expected earnings of $1.36 a share.
Net sales rose 8% to $1.09 billion, topping analysts’ estimate of $1.06 billion. Comparable sales were up 4%.
By division, Hollister sales jumped 22.3% to $549.4 million, with comparable sales up 23%. Sales at Abercrombie declined 4.1% to $547.9 million, with comps down 10%.
In a release, CEO Fran Horowitz said that the company delivered “record” first quarter net sales, which were above its expectations and supported by broad-based growth across its three regions.
“We exceeded our expectations on the bottom line as well, with operating margin of 9.3% and earnings per share of $1.59,” she said. “We also returned excess cash to shareholders through share repurchases totaling $200 million in the quarter, marking our fifth consecutive quarter of share repurchases.”
For fiscal 2025, Abercrombie now expects net sales to rise 3% to 6%, up from its previous guidance of 3% to 5%. But the retailer cuts its earnings outlook to $9.50 to $10.50 per share from its previous guidance of $10.40 to $11.40 per share. It also cut its operating margin to a range of 12.5% to 13.5%, down from its previous range of 14% to 15%.
The company’s guidance includes the estimated impact of the current 30% tariff on imports from China and the 10% tariff on all other imports. It excludes other currently paused tariffs.
[READ MORE: Abercrombie posts another strong quarter; sees sales moderating]
“As we navigate the current environment, we have the team and proven capabilities in place to read, react and adapt, while continuing to deliver for customers globally,” Horowitz added. “Importantly, with a strong foundation, we remain on offense and focused on top-line growth, store expansion, and investments in digital and technology that will enable sustainable long-term success.”
Abercrombie & Fitch Co. operates approximately 790 stores across North America, Europe, Asia and the Middle East.
