Why Abercrombie & Fitch Stock Sank Today

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]