Financial Performance - Abercrombie & Fitch reported quarterly earnings of $1.59 per share, exceeding the Zacks Consensus Estimate of $1.35 per share, but down from $2.14 per share a year ago, representing an earnings surprise of 17.78% [1] - The company posted revenues of $1.1 billion for the quarter ended April 2025, surpassing the Zacks Consensus Estimate by 3.82% and up from $1.02 billion year-over-year [2] Market Performance - Abercrombie shares have declined approximately 48.4% since the beginning of the year, contrasting with the S&P 500's gain of 0.7% [3] - The current Zacks Rank for Abercrombie is 4 (Sell), indicating expectations of underperformance in the near future [6] Future Outlook - The consensus EPS estimate for the upcoming quarter is $2.48 on revenues of $1.18 billion, and for the current fiscal year, it is $10.64 on revenues of $5.12 billion [7] - The Retail - Apparel and Shoes industry is currently ranked in the bottom 46% of over 250 Zacks industries, suggesting potential challenges for Abercrombie's stock performance [8]

Financial Data and Key Metrics Changes - The company reported record net sales of $1,100,000,000 for the first quarter, representing an 8% increase compared to the previous year, exceeding the expected range of 4% to 6% [7][16] - Operating margin was 9.3%, with earnings per share of $1.59, both above the ranges provided earlier [8][18] - The company returned $200,000,000 to shareholders through share repurchases, totaling 5% of shares outstanding as of the beginning of the year [8][19] Business Line Data and Key Metrics Changes - Hollister brand achieved a 22% net sales growth, with comparable sales up 23%, marking the eighth consecutive quarter of growth [9][10] - Abercrombie brand experienced a 4% net sales decline, with comparable sales down 10%, primarily due to a decline in average unit retail (AUR) as the company worked through winter carryover inventory [11][17] Market Data and Key Metrics Changes - The Americas region saw a 7% growth, while EMEA grew by 12% and APAC by 5% [9][16] - In EMEA, strong performance was noted in the UK and Germany, with digital demand complementing the positive reception of new store openings [9][10] Company Strategy and Development Direction - The company aims to add around 100 new physical experiences in total for the year, including 60 new stores and 40 remodels, while planning to be net store openers [15][22] - The focus remains on global growth, with an emphasis on marketing, technology, and new channel partnerships to strengthen brand reach [14][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving sequential improvement in Abercrombie's sales in the second half of the year, driven by a flexible operating model that allows for quick adjustments based on customer feedback [12][40] - The company anticipates a full-year net sales growth of 3% to 6%, with operating margins expected to be in the range of 12.5% to 13.5% [21][22] Other Important Information - The company is not planning broad-based ticket price increases despite anticipated tariff impacts, which are expected to cost around $50,000,000 for 2025 [20][21] - The tax rate for the quarter was in line with expectations at 25%, with a forecasted tax rate around 27% for the full year [18][21] Q&A Session Summary Question: Insights on Hollister and Abercrombie's outlook - Management highlighted the flexibility of their model in responding to customer trends, with expectations for Abercrombie to see an inflection in the back half of the year [28][40] Question: Real estate strategy and store openings - The company plans to close 20 stores this year, down from 40 last year, due to successful landlord negotiations and opportunities to maintain store productivity [32][33] Question: Full-year sales outlook and confidence - Management expressed confidence in the higher end of the sales guidance due to strong balance sheet and ongoing investments in marketing and technology [36][38] Question: Traffic and inventory management - Positive traffic was reported for both Abercrombie and Hollister, with management indicating that carryover inventory levels are normalized compared to previous years [44][45] Question: Gross margin expectations - Management expects sequential improvement in gross margins as they work through freight and carryover pressures, with flat AURs anticipated for the second quarter [48][88] Question: Promotions and inventory growth - Promotions will be aligned with inventory levels and customer demand, with expectations for fewer promotions in the back half of the year as inventory normalizes [92][95] Question: Growth expectations in Europe and Asia - Management confirmed expectations for growth across all regions, with strong performance noted in the UK and Germany [96][98]

Financial Data and Key Metrics Changes - The company reported record net sales of $1,100,000,000 for Q1 2025, representing an 8% increase compared to the previous year, exceeding the expected range of 4% to 6% [6][14] - Operating margin was 9.3%, with earnings per share of $1.59, both above the previously provided ranges [6][14] - The company returned $200,000,000 to shareholders through share repurchases, totaling 5% of shares outstanding as of the beginning of the year [6][18] Business Line Data and Key Metrics Changes - Hollister brand achieved a 22% net sales growth, with comparable sales up 23%, marking the eighth consecutive quarter of growth [7][15] - Abercrombie Brands experienced a 4% net sales decline, with comparable sales down 10%, primarily due to a decline in average unit retail (AUR) as the company worked through winter carryover inventory [9][15] Market Data and Key Metrics Changes - The Americas region saw a 7% growth, while EMEA grew by 12% and APAC by 5% [7][14] - Strong comparable sales were reported across all regions, with the Americas up 4%, EMEA up 6%, and APAC up 2% [14] Company Strategy and Development Direction - The company aims to add around 100 new physical experiences in 2025, including 60 new stores and 40 remodels, while maintaining a focus on global growth [13][21] - The management emphasized the importance of agility in inventory management and marketing investments to align product offerings with customer demand [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving sequential improvement in sales for Abercrombie Brands in the second half of the year, driven by positive customer responses to new product categories [10][41] - The company anticipates a full-year net sales growth of 3% to 6%, with operating margin expected to be in the range of 12.5% to 13.5% [20][21] Other Important Information - The company is not planning broad-based ticket price increases despite anticipated tariff impacts, focusing instead on maintaining product quality and aligning inventory with customer value perception [11][19] - The tax rate for the quarter was in line with expectations at 25%, with net income per diluted share above outlook at $1.59 compared to $2.14 last year [17] Q&A Session Summary Question: Outlook for Hollister and Abercrombie - Management highlighted the strong performance of Hollister and discussed the flexibility of Abercrombie's model to respond to customer trends, expecting an inflection in the back half of the year [30][41] Question: Full Year Profit Outlook - The management explained the reduction in profit expectations primarily due to tariffs, while maintaining confidence in the sales growth outlook based on strong balance sheet and planned investments [38][39] Question: Traffic and Inventory Levels - Positive traffic was reported for both Abercrombie and Hollister, with management indicating that carryover inventory levels are normalized compared to previous years [45][46] Question: Promotions and Growth Expectations - Management discussed expectations for promotions, indicating that AUR pressure would continue in the near term but would improve in the back half of the year [94][96] Question: Growth in Europe and Asia - The company remains optimistic about growth in EMEA and APAC, particularly in the UK and Germany, where strong performance was noted [99][100] Question: Improvement for Abercrombie - Management acknowledged the challenges faced in Q1 but expressed confidence in the brand's ability to adapt and respond to emerging trends, expecting improvement in the second half [102][106]

Core Insights - Retailers are experiencing mixed earnings reports, reflecting the impact of tariffs, consumer demand, and operational resilience [1] Group 1: Macy's Inc - Macy's reported adjusted first-quarter earnings of 16 cents per share on revenue of $4.60 billion, exceeding Wall Street expectations [2] - The company has cut its full-year profit forecast due to tariff hikes and increased promotions [2] - Macy's is undergoing a significant turnaround, closing approximately 150 stores and focusing on stronger brands like Bloomingdale's and Bluemercury [2] - Despite a 4% increase before the market opened, Macy's stock is down over 28% year to date [2] Group 2: Abercrombie & Fitch Co - Abercrombie & Fitch's stock surged over 28% in premarket trading following a strong first quarter [3] - The retailer posted earnings of $1.59 per share on $1.1 billion in revenue, significantly surpassing estimates [3] - Although Abercrombie issued positive guidance for the current quarter, it reduced its full-year profit forecast due to an anticipated $50 million impact from tariffs [3] - Prior to this report, Abercrombie's stock was down 48.4% in 2025 [3] Group 3: Dick's Sporting Goods Inc - Dick's Sporting Goods saw its stock rise 5% in electronic trading after reporting earnings of $3.37 per share on $3.17 billion in net sales, both exceeding analyst forecasts [4] - The company reaffirmed its full-year outlook and is managing tariff challenges effectively [4] - Dick's announced plans to acquire rival Foot Locker, indicating confidence in its long-term strategy [4] - Dick's Sporting Goods has a year-to-date deficit of 23.9% [4]

Core Viewpoint - Abercrombie & Fitch's shares surged despite a lowered profit outlook due to tariffs impacting the business by $50 million, with the company adjusting its earnings per share forecast downward while raising its revenue outlook for 2025 [1][2]. Financial Performance - The company reported a net income of $80.4 million, or $1.59 per share, for the first quarter, compared to $114 million, or $2.14 per share, a year earlier [3]. - Revenue for the first quarter reached $1.10 billion, an increase of approximately 8% from $1.02 billion a year earlier, marking a record high for the fiscal first quarter [4][5]. - Earnings per share exceeded expectations at $1.59 compared to the anticipated $1.39, while revenue also surpassed forecasts of $1.07 billion [5]. Outlook Adjustments - The company revised its full-year earnings per share expectation to a range of $9.50 to $10.50, down from $10.40 to $11.40 [1]. - Abercrombie raised its 2025 revenue growth outlook to 3% to 6%, up from a previous estimate of 3% to 5% [2]. - The operating margin forecast was cut to a range of 12.5% to 13.5%, down from 14% to 15% [2]. Brand Performance - The Hollister brand led the performance with a growth of 22%, achieving its best-ever first quarter net sales, while Abercrombie brand net sales decreased by 4% compared to a 31% sales growth in 2024 [4].

Abercrombie and Fitch (ANF) is a Zacks Rank #5 (Strong Sell) despite the fact that the company beat last quarter, the company is reporting before the bell today. This article was published before the company posted the latest results. The retail sector has been plagued by the tariff tantrum that the market is facing.  This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.Description                        Abercrombie & Fitch Co. engages in the retail of appar ...

Financial Performance - First quarter net sales reached $1.1 billion, an increase of 8% year-over-year[63] - Americas net sales increased by 7% year-over-year[63, 66] - EMEA net sales increased by 12% year-over-year[63, 66] - APAC net sales increased by 5% year-over-year[63, 66] - Abercrombie Brands net sales increased by 22% year-over-year[63, 69] - Hollister Brands net sales decreased by 4% year-over-year[63, 69] - Operating margin was 9.3%, exceeding the outlook of 8-9%[63, 73] - Net income per diluted share was $1.59, above the outlook of $1.25-$1.45[63, 76] Financial Position - Cash and equivalents totaled $511 million, compared to $864 million last year[79] - Inventories increased to $542 million, up 21% from last year[85] - Total liquidity was $940 million, compared to $1.2 billion last year[82] Fiscal Outlook - The company expects net sales growth in the range of 3% to 6% for fiscal year 2025[88] - The company expects operating margin in the range of 12.5% to 13.5% for fiscal year 2025[88] - The company anticipates net income per diluted share in the range of $9.50 to $10.50 for fiscal year 2025[88]

Core Viewpoint - Abercrombie & Fitch Co. reported record first quarter net sales of $1.1 billion, reflecting an 8% increase compared to the previous year, driven by broad-based growth across regions, particularly from Hollister brands which saw a 22% increase in sales [2][5][6] Financial Performance - Net sales for the first quarter ended May 3, 2025, were $1,097,311,000, up from $1,020,730,000 in the same quarter of 2024, marking an 8% increase [4][6][7] - Operating income decreased to $101,533,000, down from $129,849,000 year-over-year, resulting in an operating margin of 9.3%, down from 12.7% [6][24] - Net income attributable to Abercrombie & Fitch was $80,413,000, compared to $113,850,000 in the prior year, with diluted earnings per share at $1.59, down from $2.14 [6][24] Segment Performance - Net sales by segment showed the following growth: Americas up 7% to $874,804,000, EMEA up 12% to $185,036,000, and APAC up 5% to $37,471,000 [4][5] - Brand performance indicated Hollister brands grew by 22% while Abercrombie brands saw a decline of 4% [2][5][7] Cash Flow and Capital Allocation - The company repurchased 2.6 million shares for approximately $200 million, representing a 5% reduction in shares outstanding [2][9] - As of May 3, 2025, the company had cash and equivalents of $511 million, down from $864 million a year prior, with total liquidity of approximately $940 million [11][9] Outlook - For the second quarter, the company expects net sales growth in the range of 3% to 5%, with an operating margin projected between 12% and 13% [12][17] - The full-year outlook anticipates net sales growth of 3% to 6% and net income per diluted share in the range of $9.50 to $10.50 [17]

Group 1 - Abercrombie & Fitch Co. is set to release its first-quarter earnings results on May 28, with expected earnings of $1.33 per share, a decrease from $2.14 per share in the same period last year [1] - The company anticipates quarterly revenue of $1.06 billion, an increase from $1.02 billion a year earlier [1] - In the fourth quarter, Abercrombie & Fitch reported adjusted earnings per share of $3.57, surpassing the analyst consensus of $3.52, with quarterly sales of $1.585 billion exceeding estimates of $1.563 billion [2] Group 2 - Analyst ratings for Abercrombie & Fitch show varied opinions, with Raymond James maintaining an Outperform rating and lowering the price target from $110 to $90 [7] - JP Morgan also maintained an Overweight rating but cut the price target from $155 to $142 [7] - UBS increased its price target from $115 to $130 while maintaining a Buy rating [7] - Barclays initiated coverage with an Equal-Weight rating and a price target of $71 [7] - Citigroup maintained a Buy rating but lowered the price target from $135 to $98 [7]

Core Viewpoint - Abercrombie & Fitch Co. is expected to report first-quarter fiscal 2025 results on May 28, with projected revenues of $1.06 billion, indicating a 3.7% growth year-over-year, but earnings per share are anticipated to decline by 36.5% to $1.36 compared to the previous year [1][2]. Financial Performance - The consensus estimate for Abercrombie's first-quarter earnings is $1.36 per share, down from $2.14 in the same quarter last year, reflecting a 36.5% decline [2]. - The company has seen a 4.2% decrease in earnings estimates over the past week, and it has historically delivered an earnings surprise of 14% on average over the last four quarters [2][3]. - The operating margin for the first quarter is expected to be between 8-9%, a significant drop from 12.7% a year ago, with EPS guidance of $1.25-$1.45 [6]. Sales Trends - Abercrombie is experiencing a slowdown in sales growth, projecting a 4-6% increase for the first quarter of fiscal 2025, a stark contrast to the 22% growth in the same period last year [4]. - The company anticipates a 9% increase in adjusted operating expenses and a 26.4% decline in adjusted operating income for the fiscal first quarter [7]. Cost Pressures - Elevated operating and freight costs are expected to pressure margins, with the company forecasting continued margin pressure in the first half of fiscal 2025 [5][19]. - The impact of U.S. tariffs on imports from China, Canada, and Mexico is projected to cost the company $5 million in fiscal 2025 [8]. Brand Performance - Despite slowing sales growth, Abercrombie benefits from strong brand performance, with projected sales growth of 9.9% for the Hollister brand and 1.7% for Abercrombie [9]. - The company has improved store traffic through fashion trends and store optimization, enhancing the shopping experience and supporting e-commerce growth [10]. Stock Performance and Valuation - Abercrombie's shares have declined 51.3% over the past year, underperforming its industry peers, while trading at a forward P/E multiple of 6.79X, below the industry average of 17.68X [11][16]. - The stock is currently priced at $73.17, which is 62.9% below its 52-week high of $196.99 [15]. Strategic Outlook - The company has focused on rebranding and premium casual wear, which has improved brand perception and sales growth [18]. - However, the near-term outlook is challenged by cost pressures and a deceleration in sales momentum, indicating a transition out of a high-growth phase [20][21].