[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part provides the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including statements of operations and comprehensive income, balance sheets, statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining significant accounting policies, revenue recognition, asset impairment, income taxes, borrowings, share-based compensation, derivative instruments, and segment reporting [Condensed Consolidated Statements of Operations and Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) This section presents the company's unaudited condensed consolidated statements of operations and comprehensive income | Metric (Thousands) | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :----------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Net sales | $1,208,560 | $1,133,974 | $2,305,871 | $2,154,704 | | Operating income | $206,658 | $175,625 | $308,191 | $305,474 | | Net income | $143,388 | $135,379 | $225,127 | $250,457 | | Net income attributable to A&F | $141,383 | $133,168 | $221,796 | $247,018 | | Basic EPS | $2.97 | $2.60 | $4.58 | $4.84 | | Diluted EPS | $2.91 | $2.50 | $4.47 | $4.64 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's unaudited condensed consolidated balance sheets | Metric (Thousands) | August 2, 2025 | February 1, 2025 | | :----------------- | :------------- | :--------------- | | Cash and equivalents | $572,730 | $772,727 | | Total current assets | $1,489,115 | $1,673,431 | | Total assets | $3,301,941 | $3,299,887 | | Total current liabilities | $1,038,041 | $1,126,944 | | Total long-term liabilities | $956,696 | $821,620 | | Total stockholders' equity | $1,307,204 | $1,351,323 | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section presents the company's unaudited condensed consolidated statements of stockholders' equity | Metric (Thousands) | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :----------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Balance, beginning of period | $1,202,594 | $1,091,170 | $1,351,323 | $1,049,987 | | Net income | $143,388 | $135,379 | $225,127 | $250,457 | | Purchase of Common Stock | $(50,480) | $(15,000) | $(252,046) | $(30,000) | | Ending balance | $1,307,204 | $1,221,150 | $1,307,204 | $1,221,150 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's unaudited condensed consolidated statements of cash flows | Metric (Thousands) | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :----------------- | :------------------------- | :------------------------- | | Net cash provided by operating activities | $112,893 | $260,119 | | Net cash used for investing activities | $(31,943) | $(96,649) | | Net cash used for financing activities | $(290,713) | $(326,961) | | Net decrease in cash and equivalents | $(200,063) | $(163,390) | | Cash and equivalents, end of period | $580,332 | $746,295 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes explaining significant accounting policies, revenue recognition, asset impairment, income taxes, borrowings, share-based compensation, derivative instruments, and segment reporting [Note 1. NATURE OF BUSINESS](index=9&type=section&id=Note%201.%20NATURE%20OF%20BUSINESS) This note describes the company's global retail operations, brand families, and geographic segments - A&F is a global, digitally-led omnichannel retailer selling apparel, personal care, and accessories for men, women, and kids[24](index=24&type=chunk) - The company manages its business through three reportable geographic segments: Americas, EMEA, and APAC[25](index=25&type=chunk) - Key brand families include Abercrombie and Hollister[26](index=26&type=chunk) [Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=Note%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the company's key accounting principles, including consolidation, fiscal year, estimates, and recent pronouncements - The company consolidates variable interest entities (VIEs) where it is the primary beneficiary, such as business ventures in the UAE and Kuwait[28](index=28&type=chunk) - The fiscal year ends on the Saturday closest to January 31, typically resulting in a 52-week year[29](index=29&type=chunk) - Management makes estimates and assumptions in financial statement preparation, which may be affected by global economic conditions like inflation and foreign exchange rates[32](index=32&type=chunk) - Recent accounting pronouncements (ASU 2023-09 and ASU 2024-03) are not expected to have a significant impact on the company's consolidated financial statements, other than new disclosure requirements[34](index=34&type=chunk) [Note 3. INTERCHANGE FEE SETTLEMENT](index=11&type=section&id=Note%203.%20INTERCHANGE%20FEE%20SETTLEMENT) This note details the financial impact of a payment card interchange fee litigation settlement - A **$39 million** net benefit was recorded in Q2 Fiscal 2025 from a payment card interchange fee litigation settlement[38](index=38&type=chunk) - The settlement included a **$43 million** benefit in selling expense and a **$4 million** expense in general and administrative expense[38](index=38&type=chunk) [Note 4. REVENUE RECOGNITION](index=11&type=section&id=Note%204.%20REVENUE%20RECOGNITION) This note explains the company's revenue recognition policies, focusing on contract liabilities and redemptions Contract Liabilities (Thousands) | Contract Liabilities (Thousands) | August 2, 2025 | February 1, 2025 | August 3, 2024 | February 3, 2024 | | :------------------------------- | :------------- | :--------------- | :------------- | :--------------- | | Gift card liability | $35,363 | $45,364 | $39,914 | $41,144 | | Loyalty programs liability | $34,695 | $32,199 | $29,535 | $27,937 | Revenue Recognized (Thousands) | Revenue Recognized (Thousands) | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :----------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Gift card redemptions/breakage | $28,743 | $32,831 | $59,643 | $63,492 | | Loyalty reward redemptions/breakage | $17,008 | $14,712 | $32,320 | $28,670 | [Note 5. NET INCOME PER SHARE](index=12&type=section&id=Note%205.%20NET%20INCOME%20PER%20SHARE) This note provides details on the calculation of basic and diluted net income per share Shares (Thousands) | Shares (Thousands) | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :----------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Weighted-average — basic shares | 47,550 | 51,246 | 48,382 | 51,069 | | Dilutive effect of share-based compensation awards | 1,001 | 2,033 | 1,210 | 2,208 | | Weighted-average — diluted shares | 48,551 | 53,279 | 49,592 | 53,277 | [Note 6. FAIR VALUE](index=12&type=section&id=Note%206.%20FAIR%20VALUE) This note describes the company's fair value measurements for assets and liabilities, categorized by input observability - Fair value measurements are categorized into a three-level hierarchy based on input observability: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[42](index=42&type=chunk)[43](index=43&type=chunk) Assets at Fair Value (Thousands) | Assets at Fair Value (Thousands) | Level 1 (Aug 2, 2025) | Level 2 (Aug 2, 2025) | Total (Aug 2, 2025) | Level 1 (Feb 1, 2025) | Level 2 (Feb 1, 2025) | Total (Feb 1, 2025) | | :------------------------------- | :-------------------- | :-------------------- | :------------------ | :-------------------- | :-------------------- | :------------------ | | Cash equivalents | $168,794 | $14,195 | $182,989 | $304,072 | $1,013 | $305,085 | | Derivative instruments | — | $714 | $714 | — | $4,315 | $4,315 | | Rabbi Trust assets | $1,164 | $54,669 | $55,833 | $1,164 | $53,921 | $55,085 | | Restricted cash equivalents | $3,084 | $1,499 | $4,583 | $3,070 | $1,496 | $4,566 | | Total assets | $173,042 | $71,077 | $244,119 | $308,306 | $60,745 | $369,051 | Liabilities at Fair Value (Thousands) | Liabilities at Fair Value (Thousands) | Level 2 (Aug 2, 2025) | Total (Aug 2, 2025) | Level 2 (Feb 1, 2025) | Total (Feb 1, 2025) | | :------------------------------------ | :-------------------- | :------------------ | :-------------------- | :------------------ | | Derivative instruments | $7,110 | $7,110 | — | — | [Note 7. PROPERTY AND EQUIPMENT, NET](index=13&type=section&id=Note%207.%20PROPERTY%20AND%20EQUIPMENT,%20NET) This note presents the carrying amounts of the company's property and equipment, net of depreciation and amortization Property and Equipment (Thousands) | Property and Equipment (Thousands) | August 2, 2025 | February 1, 2025 | | :--------------------------------- | :------------- | :--------------- | | Property and equipment, at cost | $2,743,388 | $2,605,871 | | Less: Accumulated depreciation and amortization | $(2,104,798) | $(2,030,098) | | Property and equipment, net | $638,590 | $575,773 | [Note 8. LEASES](index=13&type=section&id=Note%208.%20LEASES) This note details the company's operating lease costs and future minimum commitments Operating Lease Costs (Thousands) | Operating Lease Costs (Thousands) | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :-------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Single lease cost | $76,735 | $64,163 | $146,582 | $124,143 | | Variable lease cost | $45,929 | $45,197 | $94,504 | $91,366 | | Operating lease right-of-use asset impairment | $623 | $472 | $1,072 | $811 | | Sublease income | $(1,048) | $(986) | $(2,036) | $(1,970) | | Total operating lease cost | $122,239 | $108,846 | $240,122 | $214,350 | - The company had minimum commitments of approximately **$121.6 million** for operating lease contracts not yet commenced as of August 2, 2025[46](index=46&type=chunk) [Note 9. ASSET IMPAIRMENT](index=14&type=section&id=Note%209.%20ASSET%20IMPAIRMENT) This note outlines the company's asset impairment charges, primarily related to store assets Asset Impairment Charges (Thousands) | Asset Impairment Charges (Thousands) | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :----------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Operating lease right-of-use asset impairment | $623 | $471 | $1,072 | $810 | | Property and equipment asset impairment | $1,228 | $230 | $1,458 | $757 | | Intangible asset impairment | $922 | — | $922 | — | | Total asset impairment | $2,773 | $701 | $3,452 | $1,567 | - Asset impairment charges for the twenty-six weeks ended August 2, 2025, primarily related to store assets in the EMEA and APAC segments, reducing their carrying amount to approximately **$7.4 million**[48](index=48&type=chunk) [Note 10. INCOME TAXES](index=14&type=section&id=Note%2010.%20INCOME%20TAXES) This note discusses the company's effective tax rate, the impact of tax legislation, and valuation allowances - The effective tax rate is subject to variation due to jurisdictional mix of earnings, foreign currency exchange rates, changes in laws, and discrete items[49](index=49&type=chunk) - The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, did not have a material impact on the consolidated financial statements[50](index=50&type=chunk) - The company did not recognize income tax benefits on **$21.8 million** and **$31.8 million** of pretax losses in Switzerland for the thirteen and twenty-six weeks ended August 2, 2025, respectively[51](index=51&type=chunk) - An additional valuation allowance of **$5.6 million** was recorded against net deferred tax assets in Japan during the thirteen and twenty-six weeks ended August 2, 2025[51](index=51&type=chunk) [Note 11. BORROWINGS](index=15&type=section&id=Note%2011.%20BORROWINGS) This note provides information on the company's ABL Facility and compliance with debt covenants - The ABL Facility is a **$500 million** senior secured asset-based revolving credit facility, maturing on August 2, 2029[55](index=55&type=chunk) - As of August 2, 2025, there were no outstanding borrowings under the ABL Facility[56](index=56&type=chunk) - Available borrowing capacity under the ABL Facility was **$449.5 million** as of August 2, 2025[56](index=56&type=chunk)[139](index=139&type=chunk) - The company was in compliance with all debt covenants as of August 2, 2025[59](index=59&type=chunk) [Note 12. SHARE-BASED COMPENSATION](index=15&type=section&id=Note%2012.%20SHARE-BASED%20COMPENSATION) This note details the company's share-based compensation expense and unrecognized compensation costs Share-Based Compensation (Thousands) | Share-Based Compensation (Thousands) | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :----------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Share-based compensation expense | $9,793 | $9,233 | $20,384 | $20,596 | | Income tax benefits | $1,487 | $1,240 | $2,885 | $2,518 | | Income tax discrete benefits realized | $247 | $2,778 | $4,838 | $17,332 | | Employee tax withheld upon issuance of shares | $768 | $2,052 | $34,830 | $67,225 | Unrecognized Compensation Cost (Thousands) | Unrecognized Compensation Cost (Thousands) | Service-based Restricted Stock Units | Performance-based Restricted Stock Units | Market-based Restricted Stock Units | | :--------------------------------------- | :----------------------------------- | :--------------------------------------- | :---------------------------------- | | Unrecognized compensation cost | $55,180 | $12,220 | $7,027 | | Remaining weighted-average period (years) | 1.3 | 0.9 | 1.1 | [Note 13. DERIVATIVE INSTRUMENTS](index=18&type=section&id=Note%2013.%20DERIVATIVE%20INSTRUMENTS) This note explains the company's use of foreign currency exchange forward contracts to manage market risk - The company uses foreign currency exchange forward contracts to manage foreign currency exchange rate exposure, primarily for forecasted intercompany inventory sales (cash flow hedges) and foreign-currency-denominated net monetary assets/liabilities[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk) Notional Amount of Foreign Currency Exchange Forward Contracts (Thousands) | Notional Amount of Foreign Currency Exchange Forward Contracts (Thousands) | August 2, 2025 (Cash Flow Hedges) | August 2, 2025 (Monetary Assets/Liabilities) | | :----------------------------------------------------------------------- | :-------------------------------- | :------------------------------------------- | | Euro | $66,284 | $22,310 | | British pound | $88,178 | — | | Canadian dollar | $35,827 | — | Derivative Fair Values (Thousands) | Derivative Fair Values (Thousands) | August 2, 2025 | February 1, 2025 | | :--------------------------------- | :------------- | :--------------- | | Derivatives designated as cash flow hedging instruments (assets) | $714 | $4,315 | | Derivatives designated as cash flow hedging instruments (liabilities) | $6,848 | — | | Derivatives not designated as hedging instruments (liabilities) | $262 | — | | Total assets | $714 | $4,315 | | Total liabilities | $7,110 | — | [Note 14. ACCUMULATED OTHER COMPREHENSIVE LOSS](index=19&type=section&id=Note%2014.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) This note details the activity and components of accumulated other comprehensive loss AOCL Activity (Thousands) | AOCL Activity (Thousands) | 13 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 3, 2024 | | :------------------------ | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Beginning balance | $(141,029) | $(139,151) | $(137,282) | $(135,968) | | Foreign Currency Translation Adjustment | $2,153 | $12,815 | $3,441 | $1,604 | | Unrealized Gain (Loss) on Derivative Financial Instruments (before reclass) | $(1,239) | $(12,575) | $(587) | $442 | | Reclassified loss from AOCL | $2,328 | $728 | $(527) | $(1,010) | | Ending balance | $(137,828) | $(137,828) | $(134,991) | $(134,991) | [Note 15. SEGMENT REPORTING](index=20&type=section&id=Note%2015.%20SEGMENT%20REPORTING) This note provides financial information by geographic segment and brand family - The company's CODM (CEO, COO, CFO) manages business operations and evaluates segment performance based on net sales and operating income/loss for Americas, EMEA, and APAC[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) Segment Net Sales (Thousands) | Segment Net Sales (Thousands) | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :---------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Americas | $974,200 | $901,224 | $1,849,004 | $1,721,345 | | EMEA | $197,210 | $199,682 | $382,246 | $364,460 | | APAC | $37,150 | $33,068 | $74,621 | $68,899 | | Total | $1,208,560 | $1,133,974 | $2,305,871 | $2,154,704 | Segment Operating Income (Loss) (Thousands) | Segment Operating Income (Loss) (Thousands) | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :------------------------------------------ | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Americas | $319,829 | $275,120 | $546,789 | $527,467 | | EMEA | $24,530 | $38,040 | $40,564 | $62,541 | | APAC | $(5,967) | $(3,245) | $(10,377) | $(3,567) | | Corporate and other unallocated expenses | $(131,734) | $(134,290) | $(268,785) | $(280,967) | | Total Operating Income | $206,658 | $175,625 | $308,191 | $305,474 | Net Sales by Brand (Thousands) | Net Sales by Brand (Thousands) | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :----------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Abercrombie | $551,868 | $582,416 | $1,099,815 | $1,153,929 | | Hollister | $656,692 | $551,558 | $1,206,056 | $1,000,775 | | Total | $1,208,560 | $1,133,974 | $2,305,871 | $2,154,704 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and liquidity. It includes an overview of the business, current trends and outlook, detailed analysis of financial performance, liquidity and capital resources, and discussions of recent accounting pronouncements, critical accounting estimates, and non-GAAP financial measures [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=23&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights the inherent risks and uncertainties associated with forward-looking statements - Forward-looking statements are subject to risks and uncertainties, and actual results may differ from expectations[78](index=78&type=chunk) - Key risk factors include global trade policy (tariffs), changes in global economic and financial conditions (inflation), global operations, geopolitical landscape, natural disasters, customer demand, competition, digital/omnichannel initiatives, seasonality, foreign currency fluctuations, tax obligations, cybersecurity, intellectual property, climate change, reputational harm, and litigation[78](index=78&type=chunk)[80](index=80&type=chunk) [INTRODUCTION](index=24&type=section&id=INTRODUCTION) This section introduces the purpose of the Management's Discussion and Analysis, supplementing the financial statements - The MD&A provides an understanding of the Company's results of operations, financial condition, and liquidity, supplementing the Condensed Consolidated Financial Statements[82](index=82&type=chunk) [OVERVIEW](index=25&type=section&id=OVERVIEW) This section provides a general description of the company's global retail business and operational structure - The company is a global, digitally-led omnichannel retailer offering apparel, personal care, and accessories through its own stores, digital channels, and third-party arrangements[83](index=83&type=chunk) - Business is managed geographically (Americas, EMEA, APAC) and includes Abercrombie and Hollister brand families[84](index=84&type=chunk)[85](index=85&type=chunk) - Operations are seasonal, with the Fall season (back-to-school and holiday) historically generating the greatest sales activity[86](index=86&type=chunk) [CURRENT TRENDS AND OUTLOOK](index=25&type=section&id=CURRENT%20TRENDS%20AND%20OUTLOOK) This section discusses the company's strategic growth plans, macroeconomic impacts, and operational initiatives - The "Always Forward Plan" guides the company's strategic growth principles, focusing on sustainable and profitable growth[87](index=87&type=chunk) - Fiscal 2025 focus areas include executing focused growth plans (marketing, store investments, new geographies, brand playbooks, testing/chase strategies), accelerating an enterprise-wide digital revolution (ERP transformation, cloud migration, digital/technology investments), and operating with financial discipline (agile inventory, pricing strategies, durable balance sheet, consistent free cash flow)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - Macroeconomic conditions (volatile interest rates, inflation, geopolitical landscape, foreign exchange) and tariffs (new U.S. universal baseline tariff, country-specific tariffs) continue to impact the global economy and the company's business[93](index=93&type=chunk) - The company expects to incur approximately **$90 million** in net tariff expense (**170 basis points** as a percent of net sales) in Fiscal 2025, negatively impacting operating profit[93](index=93&type=chunk) - Global supply chain disruptions (maritime routes, higher costs, competition) are being monitored, with potential mitigating actions like increased air freight usage[95](index=95&type=chunk) - The company is modernizing its global store network, planning approximately **40 net new store openings** and **40 remodels/rights-sizes** in Fiscal 2025[97](index=97&type=chunk)[98](index=98&type=chunk) - The One Big Beautiful Bill Act (OBBBA) and Pillar Two Model Rules did not have a material impact on the company's effective tax rate for Fiscal 2024 and are not projected to for Fiscal 2025[100](index=100&type=chunk)[101](index=101&type=chunk) [Summary of results](index=29&type=section&id=Summary%20of%20results) This section provides a high-level summary of the company's key financial performance metrics Metric | Metric | 13 Weeks Ended Aug 2, 2025 (GAAP) | 13 Weeks Ended Aug 3, 2024 (GAAP) | 26 Weeks Ended Aug 2, 2025 (GAAP) | 26 Weeks Ended Aug 3, 2024 (GAAP) | | :----- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net sales (in thousands) | $1,208,560 | $1,133,974 | $2,305,871 | $2,154,704 | | Change in net sales | 7 % | 21 % | 7 % | 22 % | | Comparable sales | 3 % | 18 % | 4 % | 19 % | | Operating income (in thousands) | $206,658 | $175,625 | $308,191 | $305,474 | | Operating income margin | 17.1 % | 15.5 % | 13.4 % | 14.2 % | | Net income attributable to A&F (in thousands) | $141,383 | $133,168 | $221,796 | $247,018 | | Net income per share attributable to A&F | $2.91 | $2.50 | $4.47 | $4.64 | Balance Sheet (Thousands) | Balance Sheet (Thousands) | August 2, 2025 | February 1, 2025 | | :------------------------ | :------------- | :--------------- | | Cash and equivalents | $572,730 | $772,727 | | Marketable securities | $30,795 | $116,221 | | Inventories | $592,966 | $575,005 | Cash Flows (Thousands) | Cash Flows (Thousands) | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :--------------------- | :------------------------- | :------------------------- | | Net cash provided by operating activities | $112,893 | $260,119 | | Net cash used for investing activities | $(31,943) | $(96,649) | | Net cash used for financing activities | $(290,713) | $(326,961) | [RESULTS OF OPERATIONS](index=30&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed analysis of the company's financial performance across various income statement line items [Net sales](index=30&type=section&id=Net%20sales) This section analyzes the company's net sales performance by period, comparable sales, and brand - Net sales increased **7%** for both the thirteen and twenty-six weeks ended August 2, 2025, compared to the prior year[105](index=105&type=chunk) - Comparable sales increased **3%** for the thirteen weeks and **4%** for the twenty-six weeks ended August 2, 2025[105](index=105&type=chunk) Net Sales Growth | Net Sales Growth | 13 Weeks Ended Aug 2, 2025 (% Change) | 13 Weeks Ended Aug 2, 2025 (Comparable Sales %) | 26 Weeks Ended Aug 2, 2025 (% Change) | 26 Weeks Ended Aug 2, 2025 (Comparable Sales %) | | :--------------- | :------------------------------------ | :---------------------------------------------- | :------------------------------------ | :---------------------------------------------- | | Americas | 8 % | 5 % | 7 % | 5 % | | EMEA | (1) % | (5) % | 5 % | 0 % | | APAC | 12 % | 1 % | 8 % | 2 % | | Total | 7 % | 3 % | 7 % | 4 % | Net Sales by Brand (Thousands) | Net Sales by Brand (Thousands) | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :----------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Abercrombie | $551,868 | $582,416 | $1,099,815 | $1,153,929 | | Hollister | $656,692 | $551,558 | $1,206,056 | $1,000,775 | [Cost of sales, exclusive of depreciation and amortization](index=31&type=section&id=Cost%20of%20sales,%20exclusive%20of%20depreciation%20and%20amortization) This section examines the factors influencing the company's cost of sales as a percentage of net sales - Cost of sales as a percentage of net sales increased by **230 basis points** in Q2 Fiscal 2025 and **330 basis points** year-to-date[108](index=108&type=chunk)[109](index=109&type=chunk) - This increase was primarily driven by deleverage from single-digit AUR decreases, volume mix, targeted promotions, and higher AUC[108](index=108&type=chunk)[109](index=109&type=chunk) - Adverse tariff impacts (approx. **40 bps** in Q2, **20 bps** year-to-date) and higher freight costs (**120 bps** year-to-date) contributed to the increase in AUC[108](index=108&type=chunk)[109](index=109&type=chunk) [Selling expense](index=32&type=section&id=Selling%20expense) This section analyzes the changes in selling expense as a percentage of net sales and contributing factors - Selling expense as a percentage of net sales decreased by **260 basis points** in Q2 Fiscal 2025 and **90 basis points** year-to-date[111](index=111&type=chunk)[112](index=112&type=chunk) - This decrease was primarily driven by an approximate **350 basis point** benefit in Q2 (**190 bps** year-to-date) from the favorable payment card interchange fee litigation settlement[111](index=111&type=chunk)[112](index=112&type=chunk) - Partially offsetting factors included increased store occupancy and payrolls costs (approx. **90 bps** in Q2, **60 bps** year-to-date) and marketing (approx. **40 bps** year-to-date)[111](index=111&type=chunk)[112](index=112&type=chunk) [General and administrative expense](index=33&type=section&id=General%20and%20administrative%20expense) This section discusses the trends and drivers of general and administrative expense as a percentage of net sales - General and administrative expense as a percentage of net sales decreased by **120 basis points** in Q2 Fiscal 2025 and **190 basis points** year-to-date[114](index=114&type=chunk)[115](index=115&type=chunk) - The decrease was primarily due to a **190 basis point** decrease in employee compensation costs in Q2 (**200 bps** year-to-date)[114](index=114&type=chunk)[115](index=115&type=chunk) - This was partially offset by legal fees related to the Litigation Settlement (approx. **40 bps** in Q2, **20 bps** year-to-date) and other administrative expenses[114](index=114&type=chunk)[115](index=115&type=chunk) [Other operating income, net](index=33&type=section&id=Other%20operating%20income,%20net) This section presents the company's other operating income, net, and its impact on overall results Other Operating Income, Net (Thousands) | Other Operating Income, Net (Thousands) | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :------------------------------------ | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Amount | $(369) | $(67) | $3,414 | $(2,025) | | % of Net sales | 0 % | 0 % | 0.1 % | (0.1) % | [Operating income](index=34&type=section&id=Operating%20income) This section analyzes the company's operating income performance and its contributing factors by segment - Operating income increased by **$31 million** in Q2 Fiscal 2025 (**160 bps** as % of net sales) and **$3 million** year-to-date (decreased **80 bps** as % of net sales)[117](index=117&type=chunk)[119](index=119&type=chunk) - Excluding the Litigation Settlement benefit, adjusted non-GAAP operating income as a percentage of net sales decreased by **160 basis points** in Q2 and **250 basis points** year-to-date[118](index=118&type=chunk)[120](index=120&type=chunk) - Americas operating income increased by **$45 million** in Q2 (**230 bps** as % of region net sales), driven by the Litigation Settlement benefit, partially offset by higher cost of sales and store occupancy[121](index=121&type=chunk) - EMEA operating income decreased by **$14 million** in Q2 (**670 bps** as % of region net sales) due to lower comparable AUR and deleverage on store and fulfillment expenses[121](index=121&type=chunk) - APAC operating loss increased by **$3 million** in Q2 (**630 bps** as % of region net sales) due to deleverage on higher store and distribution expenses[121](index=121&type=chunk) [Interest income, net](index=35&type=section&id=Interest%20income,%20net) This section discusses the changes in net interest income and the factors influencing it - Interest income, net, decreased by **$2.7 million** in Q2 Fiscal 2025 and **$1.0 million** year-to-date[122](index=122&type=chunk)[123](index=123&type=chunk) - This was due to a reduction in interest income from lower balances on time deposits and money market accounts[122](index=122&type=chunk)[123](index=123&type=chunk) - The decrease was partially offset by lower interest expense in Fiscal 2025 due to the redemption of the 8.75% Senior Secured Notes on July 15, 2024[122](index=122&type=chunk)[123](index=123&type=chunk) [Income tax expense](index=35&type=section&id=Income%20tax%20expense) This section details the company's income tax expense and effective tax rate, along with influencing factors Income Tax Expense (Thousands) | Income Tax Expense (Thousands) | 13 Weeks Ended Aug 2, 2025 | Effective Tax Rate | 13 Weeks Ended Aug 3, 2024 | Effective Tax Rate | 26 Weeks Ended Aug 2, 2025 | Effective Tax Rate | 26 Weeks Ended Aug 3, 2024 | Effective Tax Rate | | :----------------------------- | :------------------------- | :----------------- | :------------------------- | :----------------- | :------------------------- | :----------------- | :------------------------- | :----------------- | | Income tax expense | $65,744 | 31.4 % | $45,449 | 25.1 % | $92,321 | 29.1 % | $65,243 | 20.7 % | - The change in effective tax rate was due to jurisdictional mix, lower tax benefits on share-based compensation, and an additional valuation allowance in Japan[124](index=124&type=chunk) [Net income attributable to A&F](index=36&type=section&id=Net%20income%20attributable%20to%20A%26F) This section presents the company's net income attributable to A&F, both GAAP and adjusted non-GAAP Net Income Attributable to A&F (Thousands) | Net Income Attributable to A&F (Thousands) | 13 Weeks Ended Aug 2, 2025 | % of Net sales | 13 Weeks Ended Aug 3, 2024 | % of Net sales | 26 Weeks Ended Aug 2, 2025 | % of Net Sales | 26 Weeks Ended Aug 3, 2024 | % of Net Sales | | :--------------------------------------- | :------------------------- | :------------- | :------------------------- | :------------- | :------------------------- | :------------- | :------------------------- | :------------- | | Net income attributable to A&F | $141,383 | 11.7 % | $133,168 | 11.7 % | $221,796 | 9.6 % | $247,018 | 11.5 % | | Adjusted non-GAAP net income attributable to A&F | $112,758 | 9.3 % | $133,168 | 11.7 % | $193,171 | 8.4 % | $247,018 | 11.5 % | [Net income per share attributable to A&F](index=36&type=section&id=Net%20income%20per%20share%20attributable%20to%20A%26F) This section provides the company's net income per diluted share attributable to A&F, including GAAP and adjusted non-GAAP figures Net Income Per Diluted Share Attributable to A&F | Net Income Per Diluted Share Attributable to A&F | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :----------------------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | GAAP | $2.91 | $2.50 | $4.47 | $4.64 | | Adjusted non-GAAP | $2.32 | $2.50 | $3.90 | $4.64 | | Adjusted non-GAAP on a constant currency basis | $2.32 | $2.53 | $3.90 | $4.60 | [EBITDA AND ADJUSTED EBITDA](index=37&type=section&id=EBITDA%20AND%20ADJUSTED%20EBITDA) This section presents the company's EBITDA and Adjusted EBITDA, along with their respective percentages of net sales EBITDA (Thousands) | EBITDA (Thousands) | 13 Weeks Ended Aug 2, 2025 | % of Net sales | 13 Weeks Ended Aug 3, 2024 | % of Net sales | 26 Weeks Ended Aug 2, 2025 | % of Net sales | 26 Weeks Ended Aug 3, 2024 | % of Net sales | | :----------------- | :------------------------- | :------------- | :------------------------- | :------------- | :------------------------- | :------------- | :------------------------- | :------------- | | Net income | $143,388 | 11.9 % | $135,379 | 11.9 % | $225,127 | 9.8 % | $250,457 | 11.6 % | | EBITDA | $244,082 | 20.2 % | $214,980 | 19.0 % | $384,191 | 16.7 % | $382,518 | 17.8 % | | Adjusted EBITDA | $205,508 | 17.0 % | $214,980 | 19.0 % | $345,617 | 15.0 % | $382,518 | 17.8 % | - Adjusted EBITDA, excluding the litigation settlement, decreased by **200 basis points** in Q2 Fiscal 2025 and **280 basis points** year-to-date, indicating a decline in core financial performance[128](index=128&type=chunk)[156](index=156&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=38&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's liquidity position, capital requirements, and funding strategies [Overview](index=38&type=section&id=Overview) This section provides a general assessment of the company's liquidity and primary cash needs - The company believes it has adequate liquidity to fund operating activities for the next twelve months[129](index=129&type=chunk) - Primary cash requirements include investments in the business, inventory acquisition, compensation, marketing, technology, leases, and taxes[131](index=131&type=chunk) - Total capital expenditures for Fiscal 2025 are expected to be approximately **$225 million**, with **$116.9 million** invested year-to-date[132](index=132&type=chunk) - Total liquidity as of August 2, 2025, was approximately **$1.0 billion**, comprising **$572.7 million** in cash and equivalents and incremental borrowing available under the ABL Facility[133](index=133&type=chunk) [Share repurchases](index=38&type=section&id=Share%20repurchases) This section details the company's share repurchase programs and activity - A new **$1.3 billion** share repurchase program (2025 Authorization) was approved in March 2025, replacing a prior **$500 million** program[134](index=134&type=chunk) - During the year-to-date period ended August 2, 2025, the company repurchased approximately **3.2 million shares** for **$250 million**[135](index=135&type=chunk) - As of August 2, 2025, **$1.1 billion** remained under the 2025 Authorization[135](index=135&type=chunk) [Credit facility](index=39&type=section&id=Credit%20facility) This section describes the company's ABL Facility, its capacity, and outstanding borrowings - The ABL Facility is a senior secured asset-based revolving credit facility of up to **$500 million**[138](index=138&type=chunk) - As of August 2, 2025, there were no outstanding borrowings, and **$449.5 million** in borrowing capacity was available[138](index=138&type=chunk)[139](index=139&type=chunk) [Income taxes](index=39&type=section&id=Income%20taxes) This section discusses the company's tax policies regarding undistributed foreign earnings and cash held by foreign affiliates - Undistributed earnings and profits from foreign subsidiaries as of February 2, 2019, are indefinitely reinvested[140](index=140&type=chunk) - Earnings after February 2, 2019, are accrued for state and foreign withholding taxes, allowing for repatriation without significant additional federal income tax[140](index=140&type=chunk) - As of August 2, 2025, **$209.1 million** of the company's **$572.7 million** cash and equivalents were held by foreign affiliates[140](index=140&type=chunk) [Analysis of cash flows](index=39&type=section&id=Analysis%20of%20cash%20flows) This section analyzes the company's cash flow activities from operations, investing, and financing - Net cash provided by operating activities decreased from **$260.1 million** in 2024 to **$112.9 million** in 2025 (26 weeks ended), due to increased cash outflows for payables and higher inventory costs, partially offset by increased net sales[141](index=141&type=chunk) - Net cash used for investing activities decreased from **$96.6 million** in 2024 to **$31.9 million** in 2025, primarily due to proceeds from marketable securities maturities (**$85 million**) partially offsetting capital expenditures (**$117 million**)[142](index=142&type=chunk) - Net cash used for financing activities decreased from **$327.0 million** in 2024 to **$290.7 million** in 2025, mainly due to lower share repurchases and debt redemption in the prior year[143](index=143&type=chunk)[144](index=144&type=chunk) [Contractual obligations](index=40&type=section&id=Contractual%20obligations) This section outlines the company's significant contractual obligations and any recent changes - Contractual obligations include operating leases, merchandise inventory purchase orders, unrecognized tax benefits, retirement obligations, and other agreements[145](index=145&type=chunk) - No material changes in contractual obligations since February 1, 2025, except for normal business fluctuations in merchandise inventory and lease obligations[146](index=146&type=chunk) [RECENT ACCOUNTING PRONOUNCEMENTS](index=40&type=section&id=RECENT%20ACCOUNTING%20PRONOUNCEMENTS) This section reviews the impact of recent accounting pronouncements on the company's financial statements - The company reviews recent accounting pronouncements quarterly and has determined that those not discussed are not applicable or not expected to have a material impact on its consolidated financial statements[147](index=147&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=40&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) This section confirms that there have been no significant changes to the company's critical accounting policies and estimates - No significant changes in critical accounting policies and estimates since the end of Fiscal 2024[148](index=148&type=chunk) [NON-GAAP FINANCIAL MEASURES](index=40&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) This section defines and explains the company's use of non-GAAP financial measures [Comparable sales](index=40&type=section&id=Comparable%20sales) This section defines comparable sales as a non-GAAP measure and explains its utility for investors - Comparable sales measure year-over-year percentage change in net sales for qualifying stores and digital channels, adjusted for constant currency[150](index=150&type=chunk) - This metric helps investors understand revenue attributable to existing locations versus new/closed stores[150](index=150&type=chunk) [Excluded item](index=41&type=section&id=Excluded%20item) This section identifies specific items excluded from non-GAAP adjustments, such as litigation settlements - Excluded items for non-GAAP adjustments include the settlement of claims to resolve payment card interchange fee litigation (for selling expense and operating income) and related legal fees (for general and administrative expense)[152](index=152&type=chunk) [Financial information on a constant currency basis](index=41&type=section&id=Financial%20information%20on%20a%20constant%20currency%20basis) This section explains the calculation and purpose of presenting financial information on a constant currency basis - Financial information on a constant currency basis removes the impact of foreign currency exchange rate fluctuations to enhance understanding of underlying business trends and operating performance[153](index=153&type=chunk) - The effect is calculated by applying current period exchange rates to prior year results, net of hedging impact, with a **26%** effective tax rate for per diluted share effect[153](index=153&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, including those related to investment securities, interest rates, and foreign currency exchange rates, and the strategies employed to manage these risks [INVESTMENT SECURITIES](index=43&type=section&id=INVESTMENT%20SECURITIES) This section discusses the company's exposure to interest rate risk from cash equivalents and marketable securities - Cash equivalents and short-term marketable securities have short maturities (three months or less for cash equivalents, less than twelve months for marketable securities), so interest rate changes are not expected to materially affect their fair value[157](index=157&type=chunk) - Rabbi Trust assets, primarily trust-owned life insurance policies, generated realized gains of **$0.4 million** (13 weeks) and **$0.7 million** (26 weeks) ended August 2, 2025, recorded in interest income, net[158](index=158&type=chunk) [INTEREST RATE RISK](index=43&type=section&id=INTEREST%20RATE%20RISK) This section details the company's management of interest rate risk, particularly concerning its debt facilities - The company eliminated interest rate risk associated with its **8.75% Senior Secured Notes** by redeeming them on July 15, 2024[160](index=160&type=chunk) - Future interest rate risk will be influenced by gross borrowings under the ABL Facility and changes in its interest rate terms[160](index=160&type=chunk) [FOREIGN CURRENCY EXCHANGE RATE RISK](index=43&type=section&id=FOREIGN%20CURRENCY%20EXCHANGE%20RATE%20RISK) This section describes the company's exposure to foreign currency fluctuations and its hedging strategies - The company is exposed to foreign currency exchange rate risk from international operations and transactions, including intercompany inventory sales and foreign-currency-denominated assets/liabilities[161](index=161&type=chunk)[162](index=162&type=chunk) - Foreign currency exchange forward contracts are used, primarily as cash flow hedges, to partially offset these risks, not for speculation[162](index=162&type=chunk) - A hypothetical **10%** devaluation of the U.S. dollar would decrease derivative contract fair values by approximately **$17.4 million**, which would be largely offset by changes in the underlying hedged items[163](index=163&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [DISCLOSURE CONTROLS AND PROCEDURES](index=44&type=section&id=DISCLOSURE%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the company's disclosure controls and procedures - A&F's disclosure controls and procedures were evaluated and deemed effective at a reasonable level of assurance as of August 2, 2025[165](index=165&type=chunk) [CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING](index=44&type=section&id=CHANGES%20IN%20INTERNAL%20CONTROL%20OVER%20FINANCIAL%20REPORTING) This section reports on any material changes in the company's internal control over financial reporting - No material changes in internal control over financial reporting occurred during the fiscal quarter ended August 2, 2025[166](index=166&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part provides information on legal proceedings, risk factors, equity security sales, and other disclosures [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) This section outlines the company's involvement in various legal proceedings, its policy for accruing liabilities for probable losses, and the inherent uncertainties in estimating potential liabilities - The company is a defendant in various lawsuits and adversary proceedings, ranging from individual to class actions[168](index=168&type=chunk) - Estimated liabilities are established for probable and estimable losses, but a range of reasonably possible losses cannot be estimated for all matters[168](index=168&type=chunk) - Actual liabilities may differ from recorded amounts due to uncertainties in settlement negotiations and court approvals[168](index=168&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the company's risk factors since its Fiscal 2024 Form 10-K - No material changes to the company's risk factors since the Fiscal 2024 Form 10-K[170](index=170&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the company's share repurchase activities during the second quarter of Fiscal 2025 under its new $1.3 billion authorization - No unregistered sales of equity securities occurred during the second quarter of Fiscal 2025[171](index=171&type=chunk) Period (fiscal month) | Period (fiscal month) | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :-------------------- | :------------------------------- | :--------------------------- | :--------------------------------------------------------------------------------------- | | May 4, 2025 - May 31, 2025 | 417 | $79.35 | $1,100,039,825 | | June 1, 2025 - July 5, 2025 | 382,129 | $79.93 | $1,070,079,572 | | July 6, 2025 - August 2, 2025 | 226,714 | $89.05 | $1,050,048,833 | | Total | 609,260 | $83.33 | $1,050,048,833 | - The company repurchased **609,260 shares** of Common Stock during the thirteen weeks ended August 2, 2025, under the **$1.3 billion** 2025 Authorization[171](index=171&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) This section confirms that there were no changes to Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or officers during the reported period - No changes to Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or officers during the thirteen weeks ended August 2, 2025[172](index=172&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, executive certifications, and XBRL data files - Exhibits include Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Certifications by CEO and CFO (pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350), and Inline XBRL documents[173](index=173&type=chunk) [Signatures](index=44&type=section&id=Signatures) This section provides the official signatures of the company's authorized officers for the report - The report was signed by Robert J. Ball, Senior Vice President, Chief Financial Officer, and Joseph Frericks, Senior Vice President, Corporate Controller, on September 5, 2025[176](index=176&type=chunk)

Core Insights - Abercrombie & Fitch has faced significant challenges, with its stock declining 35% over the past year, contrasting with a 17% increase in the S&P 500 [2] - The decline is attributed to weak guidance, tariff concerns, and inconsistent brand performance, particularly with the Abercrombie brand [2][3] Company Performance - Abercrombie brand sales fell by 5% in Q2, with comparable sales dropping 11%, indicating difficulty in replicating last year's growth [3] - In contrast, Hollister brand achieved a 19% sales increase, generating $657 million compared to $552 million for Abercrombie, and now accounts for over half of the company's revenue [6][7] Market Context - The overall U.S. retail environment remains stable, with July retail sales increasing by 0.5% month over month and 3.9% year over year [3] - Abercrombie & Fitch has a market cap of $4.4 billion and operates approximately 729 stores globally [5] Financial Metrics - The company has a P/E ratio of 9.5 and a P/S ratio of 0.9, with revenue growth exceeding 10% annually over the past three years [10] - Abercrombie & Fitch's operating margin is 14.2%, which lags behind the S&P 500's 18.6% [8] Challenges and Risks - Import tariffs from Vietnam, Cambodia, India, and China could impact up to $90 million this year, adding pressure to margins [8] - Historical volatility is noted, with the stock falling 70% during the 2022 inflation shock and 83% in the 2008 financial crisis [9] Investment Considerations - Despite current challenges, the fundamentals of Abercrombie & Fitch appear appealing, suggesting potential undervaluation in the market [10] - The company presents a nuanced investment opportunity, with Hollister's growth offsetting pressures from the Abercrombie brand and external factors [11]

Core Insights - The article introduces Aidan Page as a new contributing analyst for Seeking Alpha, encouraging others to share investment ideas for publication and potential earnings [1]. Group 1 - Seeking Alpha emphasizes the opportunity for individuals to become contributing analysts and share their investment insights [1]. - The platform offers a chance to earn money and gain exclusive access to SA Premium by submitting articles [1]. Group 2 - The article includes a disclosure from the analyst indicating a beneficial long position in ANF shares, highlighting personal investment interests [2]. - It clarifies that the opinions expressed are solely those of the analyst and not influenced by compensation from any company mentioned [2]. Group 3 - Seeking Alpha provides a general disclaimer regarding past performance not guaranteeing future results, indicating that no specific investment advice is being given [3]. - The platform notes that its analysts may not be licensed or certified, emphasizing the independent nature of the opinions expressed [3].

Partnership Overview - The partnership between the fashion company and the NFL started authentically with licensing several years ago [1] - Initially, the partnership involved five teams for testing and learning [1] - Currently, the fashion company represents all 32 NFL teams [1] - The product assortment has expanded from men's to include women's, kids', and even pets' apparel [1] - The partnership extends beyond licensing to include event presence throughout the season [2] - A style concierge program has been launched with NFL players [2] Customer & Marketing Focus - The NFL is a very important part of the fashion company's consumer's life [3] - The partnership aims to position the brand where sports, culture, and fashion converge [3] - Brand awareness is a key objective of the partnership [3] - Female fans represent half of the NFL fandom, presenting an opportunity for both male and female consumer engagement [3]

Partnership & Expansion - Abercrombie & Fitch (A&F) announces a multi-year fashion partnership with the NFL, marking a first for both entities [1][2] - The partnership expands beyond licensing to include events and a style concierge program with NFL players [3] - A&F initially tested the NFL partnership with 5 teams and now represents 32 teams, including men's, women's, kids', and pets' apparel [2][3] Target Audience & Market Opportunity - The NFL partnership aims to increase brand awareness by aligning with sports, culture, and fashion trends [4] - A&F recognizes that half of the NFL fandom is female, presenting an opportunity to cater to both male and female consumers [5] - A&F sees the market as large enough for both them and competitors like Fanatics, given the tens of millions of viewers tuning in each weekend [5] Strategic Focus - A&F aims to provide apparel for pre-game, after-game, and game day, helping customers represent their favorite teams [6] - A&F focuses on aligning product, voice, and experience to attract consumers regardless of the economic climate [7] - A&F has a resilient playbook to manage challenges like tariffs, focusing on controlling what they can [8]

Core Insights - Abercrombie & Fitch's international operations are crucial for understanding its financial resilience and growth potential [1][2] - The company's total revenue for the recent quarter reached $1.21 billion, reflecting a 6.6% increase from the previous year [4] International Revenue Breakdown - Revenue from Europe, Middle East, and Africa was $197.21 million, accounting for 16.3% of total revenue, which was a surprise of -4.51% compared to the consensus estimate [5] - Asia Pacific contributed $37.15 million, or 3.1% of total revenue, exceeding expectations by +2.65% [6] Future Revenue Projections - Analysts project total revenue of $1.29 billion for the ongoing fiscal quarter, a 6.3% increase year-over-year, with expected contributions of $188.51 million from Europe, Middle East, and Africa and $43.45 million from Asia Pacific [7] - For the full year, total revenue is expected to reach $5.24 billion, marking a 5.9% increase, with contributions of $813.87 million from Europe, Middle East, and Africa and $160.7 million from Asia Pacific [8] Conclusion on International Presence - The reliance on foreign markets presents both opportunities and challenges for Abercrombie, making it essential to monitor international revenue trends for future projections [9][10]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) This section highlights Abercrombie & Fitch Co.'s strong Q2 fiscal 2025 performance, record sales, and increased full-year outlook [Q2 Fiscal 2025 Performance Highlights](index=1&type=section&id=Q2%20Fiscal%202025%20Performance%20Highlights) Abercrombie & Fitch Co. achieved record Q2 net sales of $1.2 billion, up 7% YoY, driven by Hollister's 19% growth and strong profitability - Achieved 11th consecutive quarter of growth with **record net sales of $1.2 billion**, up **7% YoY**, exceeding outlook[5](index=5&type=chunk) Q2 Fiscal 2025 Key Performance Indicators | Metric | Q2 Fiscal 2025 | Q2 Fiscal 2024 | YoY Change | | :-------------------------------- | :------------- | :------------- | :--------- | | Net Sales | $1.2 billion | $1.13 billion | +7% | | Operating Margin (Reported) | 17.1% | 15.5% | +1.6 pp | | Operating Margin (Adjusted non-GAAP) | 13.9% | 15.5% | -1.6 pp | | Diluted EPS (Reported) | $2.91 | $2.50 | +$0.41 | | Diluted EPS (Adjusted non-GAAP) | $2.32 | $2.50 | -$0.18 | - Net sales growth was led by Americas (**+8%**) and APAC (**+12%**), partially offset by a **1% decline in EMEA**; Hollister brands achieved its best-ever Q2 net sales with **19% growth**, while Abercrombie brands were down **5%**[5](index=5&type=chunk) - Q2 operating margin and EPS included a **$39 million pre-tax litigation settlement benefit** (**$0.59 per share benefit** on a tax-adjusted basis); excluding this, adjusted operating margin was **13.9%** and adjusted EPS was **$2.32**, exceeding outlook[5](index=5&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Fran Horowitz highlighted record Q2 net sales, driven by Hollister's 19% growth, exceeding profitability, and an increased full-year outlook - Delivered **record second quarter net sales**, exceeding expectations with **7% growth**[3](index=3&type=chunk) - Hollister brands grew **19%** due to strong summer and back-to-school demand, while Abercrombie brands net sales were down **5%**, lapping **26% growth** in the prior year[3](index=3&type=chunk) - Exceeded second quarter profitability expectations and returned **$50 million to shareholders** through share repurchases[3](index=3&type=chunk) - Increased full-year net sales outlook, reflecting strong positioning and growth trajectory, and remains focused on investing in long-term global brand opportunities[4](index=4&type=chunk) [Second Quarter Fiscal 2025 Financial Results](index=2&type=section&id=Second%20Quarter%20Fiscal%202025%20Financial%20Results) This section details Abercrombie & Fitch Co.'s Q2 fiscal 2025 net sales, profitability, and earnings per share performance [Net Sales Performance](index=2&type=section&id=Net%20Sales%20Performance) Total net sales for Q2 fiscal 2025 increased 7% to $1.21 billion, with comparable sales growing 3% Q2 Fiscal 2025 Net Sales Overview | Metric | Q2 Fiscal 2025 | Q2 Fiscal 2024 | 1 YR % Change | Comparable Sales | | :------- | :------------- | :------------- | :------------ | :--------------- | | Net Sales | $1,208,560 | $1,133,974 | 7% | 3% | [Net Sales by Segment](index=2&type=section&id=Net%20Sales%20by%20Segment) This section presents Q2 fiscal 2025 net sales performance broken down by geographic segment Q2 Fiscal 2025 Net Sales by Segment (in thousands) | Segment | Q2 Fiscal 2025 (in thousands) | Q2 Fiscal 2024 (in thousands) | 1 YR % Change | Comparable Sales | | :------ | :---------------------------- | :---------------------------- | :------------ | :--------------- | | Americas | $974,200 | $901,224 | 8% | 5% | | EMEA | $197,210 | $199,682 | (1)% | (5)% | | APAC | $37,150 | $33,068 | 12% | 1% | [Net Sales by Brand Family](index=2&type=section&id=Net%20Sales%20by%20Brand%20Family) This section details Q2 fiscal 2025 net sales performance for Abercrombie and Hollister brand families Q2 Fiscal 2025 Net Sales by Brand Family (in thousands) | Brand Family | Q2 Fiscal 2025 (in thousands) | Q2 Fiscal 2024 (in thousands) | 1 YR % Change | Comparable Sales | | :----------- | :---------------------------- | :---------------------------- | :------------ | :--------------- | | Abercrombie | $551,868 | $582,416 | (5)% | (11)% | | Hollister | $656,692 | $551,558 | 19% | 19% | [Profitability Metrics](index=5&type=section&id=Profitability%20Metrics) Q2 fiscal 2025 reported operating income increased to $206.7 million (17.1% of net sales), with adjusted operating income at 13.9% Q2 Fiscal 2025 Operating Income and Margin | Metric | Q2 Fiscal 2025 (Reported) | % of Net Sales | Q2 Fiscal 2024 | % of Net Sales | | :---------------- | :------------------------ | :------------- | :------------- | :------------- | | Operating Income | $206,658 | 17.1% | $175,625 | 15.5% | | Operating Income (Adjusted non-GAAP) | $168,084 | 13.9% | $175,625 | 15.5% | [Earnings Per Share](index=5&type=section&id=Earnings%20Per%20Share) Q2 fiscal 2025 diluted EPS was $2.91, increasing from $2.50, with adjusted non-GAAP diluted EPS at $2.32 Q2 Fiscal 2025 Diluted Net Income Per Share | Metric | Q2 Fiscal 2025 | Q2 Fiscal 2024 | | :-------------------------------- | :------------- | :------------- | | Diluted Net Income Per Share (GAAP) | $2.91 | $2.50 | | Diluted Net Income Per Share (Adjusted non-GAAP) | $2.32 | $2.50 | [Financial Position and Liquidity](index=2&type=section&id=Financial%20Position%20and%20Liquidity) This section provides an overview of the company's balance sheet, cash flow, and capital allocation strategies [Balance Sheet Overview](index=12&type=section&id=Balance%20Sheet%20Overview) As of August 2, 2025, total assets were $3.30 billion, with cash and equivalents at $572.7 million and total stockholders' equity at $1.31 billion Selected Balance Sheet Items (in thousands) | Item | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :-------------------------------- | :------------- | :--------------- | :------------- | | Cash and equivalents | $572,730 | $772,727 | $738,402 | | Marketable securities | $30,795 | $116,221 | $15,014 | | Inventories | $592,966 | $575,005 | $539,759 | | Total current assets | $1,489,115 | $1,673,431 | $1,516,653 | | Total assets | $3,301,941 | $3,299,887 | $3,049,558 | | Total current liabilities | $1,038,041 | $1,126,944 | $1,051,656 | | Total long-term liabilities | $956,696 | $821,620 | $776,752 | | Total stockholders' equity | $1,307,204 | $1,351,323 | $1,221,150 | [Cash Flow and Capital Allocation](index=2&type=section&id=Cash%20Flow%20and%20Capital%20Allocation) Year-to-date net cash from operations decreased to $113 million, with $250 million used for share repurchases and total liquidity at $1.0 billion Year-to-Date Cash Flow Activities (in thousands) | Activity | YTD August 2, 2025 | YTD August 3, 2024 | | :-------------------------------- | :----------------- | :----------------- | | Net cash provided by operating activities | $112,893 | $260,119 | | Net cash used for investing activities | $(31,943) | $(96,649) | | Net cash used for financing activities | $(290,713) | $(326,961) | - Repurchased **3.2 million shares for $250 million** year-to-date, representing a **7% reduction** in shares outstanding; **$1.05 billion** remains on the share repurchase authorization[8](index=8&type=chunk) - Total liquidity (cash and equivalents plus available borrowing capacity) was approximately **$1.0 billion** as of August 2, 2025[10](index=10&type=chunk) [Fiscal 2025 Outlook](index=3&type=section&id=Fiscal%202025%20Outlook) This section outlines the company's updated financial projections for the full fiscal year 2025 and the upcoming third quarter [Full Year Outlook](index=3&type=section&id=Full%20Year%20Outlook) The company increased its full-year fiscal 2025 net sales growth outlook to 5-7%, with operating margin projected at 13.0-13.5% and EPS at $10.00-$10.50 Fiscal 2025 Full Year Outlook Comparison | Metric | Current Full Year Outlook | Previous Full Year Outlook | Change | | :-------------------------- | :------------------------ | :----------------------- | :----- | | Net sales growth | 5% to 7% | 3% to 6% | Increased | | Operating margin | 13.0% to 13.5% | 12.5% to 13.5% | Increased lower end | | Effective tax rate | Around 30% | Around 27% | Increased | | Net income per diluted share | $10.00 to $10.50 | $9.50 to $10.50 | Increased lower end | | Share repurchases | Around $400 million | $400 million | No change | | Capital expenditures | ~$225 million | ~$200 million | Increased | - The full-year outlook includes an estimated **$90 million of net tariff expense** (**170 basis points** as a percent of net sales) and a **$39 million pre-tax benefit** from a litigation settlement[11](index=11&type=chunk) [Third Quarter Outlook](index=3&type=section&id=Third%20Quarter%20Outlook) For Q3 fiscal 2025, net sales growth is expected to be 5-7%, with operating margin at 11-12% and diluted EPS at $2.05-$2.25 Fiscal 2025 Third Quarter Outlook | Metric | Third Quarter Outlook | | :-------------------------- | :-------------------- | | Net sales growth | 5% to 7% | | Operating margin | 11% to 12% | | Effective tax rate | Around 31% | | Net income per diluted share | $2.05 to $2.25 | | Share repurchases | At least $50 million | [Non-GAAP Financial Measures and Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section explains the company's non-GAAP financial measures and provides reconciliations to GAAP results for various periods [Explanation of Non-GAAP Measures](index=7&type=section&id=Explanation%20of%20Non-GAAP%20Measures) The company utilizes non-GAAP measures like comparable sales, constant currency, EBITDA, and Adjusted EBITDA to clarify operating performance and comparability - Non-GAAP measures are used to evaluate performance, manage operations, and provide a clearer understanding of comparability across periods by excluding certain items not reflecting future operating outlook[24](index=24&type=chunk) - **Comparable sales** are defined as the year-over-year percentage change in sales for stores open at least one year (without significant square footage changes) and digital net sales, both converted at current year's foreign currency exchange rates[25](index=25&type=chunk) - **Constant currency basis** removes the impact of foreign currency exchange rate fluctuations by applying current year average exchange rates to prior year results[26](index=26&type=chunk) - **EBITDA** is net income before interest, income taxes, depreciation, and amortization; **Adjusted EBITDA** further adjusts EBITDA for specific items like litigation settlements[27](index=27&type=chunk)[37](index=37&type=chunk) [Reconciliation of GAAP to Adjusted Non-GAAP (Q2)](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Adjusted%20Non-GAAP%20(Q2)) This section reconciles Q2 fiscal 2025 GAAP results to adjusted non-GAAP figures, excluding a $38.6 million litigation settlement Q2 Fiscal 2025 GAAP to Adjusted Non-GAAP Reconciliation (in thousands) | Metric | GAAP | Excluded item (Litigation settlement) | Adjusted non-GAAP | | :-------------------------------- | :----- | :------------------------------------ | :---------------- | | Operating income | $206,658 | $38,574 | $168,084 | | Income before income taxes | $209,132 | $38,574 | $170,558 | | Net income attributable to A&F | $141,383 | $28,625 | $112,758 | | Net income per diluted share attributable to A&F | $2.91 | $0.59 | $2.32 | [Reconciliation of GAAP to Adjusted Non-GAAP (YTD)](index=9&type=section&id=Reconciliation%20of%20GAAP%20to%20Adjusted%20Non-GAAP%20(YTD)) This section reconciles year-to-date fiscal 2025 GAAP results to adjusted non-GAAP figures, excluding a $38.6 million litigation settlement YTD Fiscal 2025 GAAP to Adjusted Non-GAAP Reconciliation (in thousands) | Metric | GAAP | Excluded item (Litigation settlement) | Adjusted non-GAAP | | :-------------------------------- | :----- | :------------------------------------ | :---------------- | | Operating income | $308,191 | $38,574 | $269,617 | | Income before income taxes | $317,448 | $38,574 | $278,874 | | Net income attributable to A&F | $221,796 | $28,625 | $193,171 | | Net income per diluted share attributable to A&F | $4.47 | $0.58 | $3.90 | [Reconciliation of Constant Currency Financial Measures (Q2)](index=10&type=section&id=Reconciliation%20of%20Constant%20Currency%20Financial%20Measures%20(Q2)) This section reconciles Q2 fiscal 2025 financial measures to a constant currency basis, showing a 6% net sales change Q2 Fiscal 2025 Constant Currency Reconciliation (in thousands) | Metric | Q2 Fiscal 2025 (GAAP) | Q2 Fiscal 2024 (GAAP) | Impact from FX | Q2 Fiscal 2024 (Constant Currency) | % Change (Constant Currency) | | :-------------------------------- | :-------------------- | :-------------------- | :------------- | :--------------------------------- | :--------------------------- | | Net sales | $1,208,560 | $1,133,974 | $10,707 | $1,144,681 | 6% | | Operating income (Adjusted non-GAAP) | $168,084 | $175,625 | $2,272 | $177,897 | (160) BPS | | Net income per diluted share (Adjusted non-GAAP) | $2.32 | $2.50 | $0.03 | $2.53 | $(0.21) | [Reconciliation of EBITDA and Adjusted EBITDA (Q2)](index=11&type=section&id=Reconciliation%20of%20EBITDA%20and%20Adjusted%20EBITDA%20(Q2)) This section reconciles Q2 fiscal 2025 EBITDA and Adjusted EBITDA, with Adjusted EBITDA at $205.5 million (17.0% of net sales) Q2 Fiscal 2025 EBITDA and Adjusted EBITDA (in thousands) | Metric | Q2 Fiscal 2025 | % of Net Sales | Q2 Fiscal 2024 | % of Net Sales | | :---------------- | :------------- | :------------- | :------------- | :------------- | | Net income | $143,388 | 11.9% | $135,379 | 11.9% | | EBITDA | $244,082 | 20.2% | $214,980 | 19.0% | | Adjusted EBITDA | $205,508 | 17.0% | $214,980 | 19.0% | [Reconciliation of EBITDA and Adjusted EBITDA (YTD)](index=11&type=section&id=Reconciliation%20of%20EBITDA%20and%20Adjusted%20EBITDA%20(YTD)) This section reconciles year-to-date fiscal 2025 EBITDA and Adjusted EBITDA, with Adjusted EBITDA at $345.6 million (15.0% of net sales) YTD Fiscal 2025 EBITDA and Adjusted EBITDA (in thousands) | Metric | YTD Fiscal 2025 | % of Net Sales | YTD Fiscal 2024 | % of Net Sales | | :---------------- | :-------------- | :------------- | :-------------- | :------------- | | Net income | $225,127 | 9.8% | $250,457 | 11.6% | | EBITDA | $384,191 | 16.7% | $382,518 | 17.8% | | Adjusted EBITDA | $345,617 | 15.0% | $382,518 | 17.8% | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's condensed consolidated statements of operations, balance sheets, and cash flows [Condensed Consolidated Statements of Operations (Q2)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Q2)) This section presents Q2 fiscal 2025 condensed consolidated statements of operations, showing $1.21 billion in net sales and $2.91 diluted EPS Q2 Fiscal 2025 Condensed Consolidated Statements of Operations (in thousands) | Item | August 2, 2025 | % of Net Sales | August 3, 2024 | % of Net Sales | | :------------------------------------------ | :------------- | :------------- | :------------- | :------------- | | Net sales | $1,208,560 | 100.0% | $1,133,974 | 100.0% | | Cost of sales, exclusive of D&A | $451,590 | 37.4% | $397,712 | 35.1% | | Operating income | $206,658 | 17.1% | $175,625 | 15.5% | | Net income attributable to A&F | $141,383 | 11.7% | $133,168 | 11.7% | | Diluted Net income per share attributable to A&F | $2.91 | | $2.50 | | [Condensed Consolidated Statements of Operations (YTD)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(YTD)) This section presents year-to-date fiscal 2025 condensed consolidated statements of operations, with $2.31 billion net sales and $4.47 diluted EPS YTD Fiscal 2025 Condensed Consolidated Statements of Operations (in thousands) | Item | August 2, 2025 | % of Net Sales | August 3, 2024 | % of Net Sales | | :------------------------------------------ | :------------- | :------------- | :------------- | :------------- | | Net sales | $2,305,871 | 100.0% | $2,154,704 | 100.0% | | Cost of sales, exclusive of D&A | $868,723 | 37.7% | $740,985 | 34.4% | | Operating income | $308,191 | 13.4% | $305,474 | 14.2% | | Net income attributable to A&F | $221,796 | 9.6% | $247,018 | 11.5% | | Diluted Net income per share attributable to A&F | $4.47 | | $4.64 | | [Condensed Consolidated Balance Sheets](index=12&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the condensed consolidated balance sheets as of August 2, 2025, showing total assets of $3.30 billion and total equity of $1.31 billion Condensed Consolidated Balance Sheets (in thousands) | Item | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :-------------------------------- | :------------- | :--------------- | :------------- | | Total current assets | $1,489,115 | $1,673,431 | $1,516,653 | | Total assets | $3,301,941 | $3,299,887 | $3,049,558 | | Total current liabilities | $1,038,041 | $1,126,944 | $1,051,656 | | Total long-term liabilities | $956,696 | $821,620 | $776,752 | | Total stockholders' equity | $1,307,204 | $1,351,323 | $1,221,150 | [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents year-to-date fiscal 2025 condensed consolidated statements of cash flows, with $112.9 million from operations Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Twenty-Six Weeks Ended August 2, 2025 | Twenty-Six Weeks Ended August 3, 2024 | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash provided by operating activities | $112,893 | $260,119 | | Net cash used for investing activities | $(31,943) | $(96,649) | | Net cash used for financing activities | $(290,713) | $(326,961) | | Net decrease in cash and equivalents | $(200,063) | $(163,390) | | Cash and equivalents, end of period | $580,332 | $746,295 | [Company Information and Forward-Looking Statements](index=4&type=section&id=Company%20Information%20and%20Forward-Looking%20Statements) This section provides company background, a safe harbor statement regarding forward-looking information, and contact details [About Abercrombie & Fitch Co.](index=4&type=section&id=About%20Abercrombie%20%26%20Fitch%20Co.) Abercrombie & Fitch Co. is a global, digitally-led omnichannel retailer of apparel and accessories, operating Abercrombie and Hollister brands - Abercrombie & Fitch Co. is a global, digitally-led, omnichannel specialty retailer of apparel and accessories for kids through millennials[16](index=16&type=chunk) - Operates brands including Abercrombie and Hollister, with approximately **810 stores globally** and e-commerce sites[17](index=17&type=chunk) [Safe Harbor Statement](index=4&type=section&id=Safe%20Harbor%20Statement) This section contains forward-looking statements subject to inherent risks and uncertainties, including global trade, economic conditions, and competition - Contains forward-looking statements about future business and events, subject to risks and uncertainties[13](index=13&type=chunk) - Key risk factors include global trade policy (tariffs), economic and financial conditions (inflation, consumer spending), global operations, geopolitical conflicts, natural disasters, customer engagement, competition, and cybersecurity threats[13](index=13&type=chunk) [Contact Information](index=4&type=section&id=Contact%20Information) This section provides contact information for investor relations and media inquiries - Investor Contact: Mo Gupta, (614) 283-6751, Investor_Relations@anfcorp.com[18](index=18&type=chunk) - Media Contact: Kate Wagner, (614) 283-6192, Public_Relations@anfcorp.com[18](index=18&type=chunk)

Core Viewpoint - Concerns about tariffs overshadowed Abercrombie & Fitch's strong second-quarter performance, leading to a decline in stock price despite impressive earnings results [1] Group 1: Financial Performance - Abercrombie & Fitch achieved a record revenue of $1.19 billion for the quarter, representing a 7% year-over-year increase [2] - The non-GAAP adjusted net income was nearly $113 million, equating to $2.32 per share [2] - Both revenue and adjusted net income exceeded analyst expectations, which were $1.19 billion and $2.27 per share, respectively [4] Group 2: Sales Drivers - The increase in sales was attributed to strong demand for the Hollister brand, aimed at affluent young consumers [4] - Notable growth was observed in the Asia-Pacific region with a 12% increase in sales, and an 8% increase in the Americas, which offset a 1% decline in Europe, the Middle East, and Africa [4] Group 3: Future Guidance - Management raised its full-year 2025 guidance, now expecting annual net sales growth of 5% to 7%, up from a previous forecast of 3% to 6% [5] - The per-share net income estimate was also increased to a range of $10 to $10.50, compared to the prior estimate of $9.50 to $10.50 [5] Group 4: Tariff Impact - The company warned that increased tariffs on imports from countries like India, Vietnam, and Indonesia will raise costs by $90 million, significantly higher than the previously estimated $50 million [6]

Core Insights - Abercrombie & Fitch Co. (ANF) reported second-quarter fiscal 2025 results with both revenue and earnings exceeding Zacks Consensus Estimates, although year-over-year earnings per share (EPS) declined [1][9] - The company raised its full-year sales growth outlook to 5-7%, reflecting strong brand momentum and performance, particularly from the Hollister brand [3][15] Financial Performance - Abercrombie's EPS for the second quarter was $2.32, down 7.2% from $2.50 in the same quarter last year, but above the expected $2.27 [1][9] - Net sales reached $1.21 billion, a 7% increase year-over-year, surpassing the Zacks Consensus Estimate of $1.19 billion [2][9] - Comparable sales improved by 3%, driven by broad-based growth across regions and strong performance from Hollister, which saw a 19% increase in sales [2][8] Regional and Brand Performance - Sales in the Americas rose 8% to $974.2 million, while EMEA sales fell 1% to $197.2 million, and APAC sales increased 12% to $37.1 million [7] - The Abercrombie brand experienced a 5% decline in sales to $551.9 million, while Hollister's sales increased by 19% to $656.7 million [8] Profitability and Expenses - Abercrombie's gross margin contracted by 230 basis points year-over-year to 62.6%, while selling expenses decreased by 1.9% to $375.4 million [10] - Operating income increased by 17.7% to $206.7 million, with an operating margin of 17.1%, up 160 basis points from the previous year [11] Financial Health - The company ended the quarter with cash and cash equivalents of $572.7 million and no net long-term borrowings, indicating a stable financial position [12] - Abercrombie repurchased approximately 0.6 million shares for about $50 million in the second quarter, with a total of 3.2 million shares repurchased year-to-date for $250 million [13] Future Outlook - For the third quarter of fiscal 2025, Abercrombie projects net sales to rise 5-7% from the previous year's $1.21 billion, with an expected EPS range of $2.05-$2.25 [14] - The company anticipates a full-year operating margin of 13-13.5%, up from previous guidance, and plans to open 60 new stores while remodeling 40 and closing 20 [15][17]

Financial Performance - Abbercrombie reports better than expected earnings and revenue [1] - Abbercrombie brand sales were down 5% with comps down 11% during the quarter [2] - Tariffs are expected to cost at least $90 million this year [6] Brand Performance & Strategy - Abbercrombie CEO reiterates that the Abbercrombie brand is strong [2] - Abbercrombie expects the brand to be back to growth by the end of the year [3] - Hollister sales were up 9% and was a big winner with back to school shopping [5] - Abbercrombie is expanding into the UK and has plans to move to Germany [4] - Abbercrombie Kids recently partnered with Macy's to drive sales [4] Market Trends & Partnerships - Abbercrombie's recent partnership with the NFL involves styling players this season, highlighting the role of fashion in sports [3][4] - Hollister recently launched a new Y2K assortment [5]