A&F(ANF) - 2026 Q2 - Quarterly Results

Executive Summary & Highlights This section highlights Abercrombie & Fitch Co.'s strong Q2 fiscal 2025 performance, record sales, and increased full-year outlook Q2 Fiscal 2025 Performance Highlights 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] 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] - 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] CEO Commentary 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] - 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] - Exceeded second quarter profitability expectations and returned $50 million to shareholders through share repurchases[3] - Increased full-year net sales outlook, reflecting strong positioning and growth trajectory, and remains focused on investing in long-term global brand opportunities[4] Second Quarter Fiscal 2025 Financial Results This section details Abercrombie & Fitch Co.'s Q2 fiscal 2025 net sales, profitability, and earnings per share performance Net Sales Performance 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 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 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 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 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 This section provides an overview of the company's balance sheet, cash flow, and capital allocation strategies Balance Sheet Overview 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 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] - Total liquidity (cash and equivalents plus available borrowing capacity) was approximately $1.0 billion as of August 2, 2025[10] Fiscal 2025 Outlook This section outlines the company's updated financial projections for the full fiscal year 2025 and the upcoming third quarter Full Year Outlook 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] Third Quarter Outlook 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 This section explains the company's non-GAAP financial measures and provides reconciliations to GAAP results for various periods Explanation of Non-GAAP Measures 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] - 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] - Constant currency basis removes the impact of foreign currency exchange rate fluctuations by applying current year average exchange rates to prior year results[26] - EBITDA is net income before interest, income taxes, depreciation, and amortization; Adjusted EBITDA further adjusts EBITDA for specific items like litigation settlements[27][37] Reconciliation of GAAP to Adjusted Non-GAAP (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) 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) 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) 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) 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 This section presents the company's condensed consolidated statements of operations, balance sheets, and cash flows Condensed Consolidated Statements of Operations (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) 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 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 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 This section provides company background, a safe harbor statement regarding forward-looking information, and contact details About Abercrombie & Fitch Co. 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] - Operates brands including Abercrombie and Hollister, with approximately 810 stores globally and e-commerce sites[17] Safe Harbor Statement 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] - 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] Contact Information This section provides contact information for investor relations and media inquiries - Investor Contact: Mo Gupta, (614) 283-6751, Investor_Relations@anfcorp.com[18] - Media Contact: Kate Wagner, (614) 283-6192, Public_Relations@anfcorp.com[18]