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 12 months.
Throughout the quarter, gross sales on the namesake Abercrombie model fell 5% whereas comparable gross sales dropped 11%.
However the success of the teen-focused Hollister model helped to salvage the quarter. General, 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 steerage of three% to six% development. A lot of that vary would high Wall Road expectations of 5.2% development, in response to LSEG.
The corporate’s shares had been down in afternoon buying and selling.
Here is how the corporate did in its fiscal second 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
Abercrombie’s reported internet revenue for the three-month interval that ended Aug. 2 was $141 million, or $2.91 per share, in contrast with $133 million, or $2.50 a share, a 12 months 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 12 months earlier.
“We entered the second half of 2025 on offense,” CEO Fran Horowitz stated in a information launch. “We’re growing our full 12 months internet gross sales outlook, reflecting our sturdy positioning and development trajectory, constructing on file 2024 outcomes. Our crew stays targeted on delivering for our clients whereas investing to capitalize on the numerous, long-term alternatives for our international 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 response to LSEG.
In the meantime, its revenue outlook for the fiscal third quarter is weaker than anticipated. The corporate anticipates earnings per share might be between $2.05 and $2.25, far under expectations of $2.53, in response to 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 response to StreetAccount. The corporate stated a $25 million tariff value, internet of mitigation efforts, is anticipated to weigh on its working revenue within the present quarter.
For the total 12 months, 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 steerage incorporates about $90 million in internet tariff prices – almost double what it beforehand anticipated. When it introduced fiscal first-quarter earnings in Might, Abercrombie stated it was anticipating a $70 million hit from tariffs that it may cut back to $50 million via mitigation.
On the time, President Donald Trump‘s so-called reciprocal tariffs had been held at 10% throughout a lot of the globe. However now Abercrombie faces greater duties on items from Vietnam, Cambodia and India, key manufacturing areas for the corporate.
The corporate reiterated throughout a convention name with analysts that it’s not planning broad worth will increase, saying greater costs are usually not a part of its outlook.
Abercrombie & Fitch, as soon as a forgotten mall model, has been on a rocket ship of development over the previous couple of years. However the surge has began to gradual at its namesake banner. On the decision, Horowitz attributed the decline in gross sales through the quarter to outdated stock that it wanted to mark all the way down to promote via, which diminished the common promoting worth of merchandise. She expects the model to be again to development by the top of the 12 months.
“We did take a bit of little bit of a step again, however we’re very assured in the place we’re headed. The model is in nice form. Our site visitors is robust,” stated Horowitz. “We’re assured we’re on a path to enchancment.”
Within the meantime, Hollister has been fueling the general enterprise efficiency, particularly with the latest launch of its Y2K assortment, which brings again a few of the model’s beloved types from the early 2000s and a contact of the outdated Abercrombie, together with graphic tees and quick skirts.
To spice up development at Abercrombie, the model has turned to new classes, equivalent to attire, athleisure and bridal, to stimulate development. It is also working to develop internationally and lean on partnerships.
On Monday, the corporate introduced it could be the NFL’s first “official trend associate” – a multiyear deal that can embrace 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 nicely 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 might be obtainable on the market through the upcoming season.
“Who would have dreamed a number of years in the past to associate with an iconic international model just like the NFL?” Horowitz informed analysts.
The partnership displays the steps retailers are taking to make sure they’ll 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. Rivals like Levi Strauss, American Eagle and Hole have teamed up with celebrities in latest advertising campaigns forward of the back-to-school and fall purchasing 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 word.
“Higher numbers … will most likely come via because the prior 12 months comparatives begin to ease, however in addition they have to be engineered by the corporate. We imagine there are some good initiatives in play right here, together with the abroad growth of the model,” stated Saunders. “Our latest channel checks at new shops in London had been all constructive, though we imagine the shops can attain a better potential as soon as the buyer financial system within the UK strengthens.”‘
Internationally, Abercrombie’s efforts to develop are paying off in some elements of the world. Throughout 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 had been down 5%.
Abercrombie has additionally began to develop into wholesale for its Abercrombie Youngsters model, which most just lately launched in Macy’s. The corporate has a really small share of the general market, which was value $82.1 billion final 12 months, Saunders stated.
“This leaves appreciable headroom for development,” stated Saunders. “Increasing via wholesale is a wise technique: it gives comparatively quick entry to new clients and requires far much less capital than opening extra shops – of which Abercrombie Youngsters nonetheless has comparatively few.”
