Abercrombie Down More Than 17% on Revised View, Issues Business Update

Core Insights - Abercrombie & Fitch Co. (ANF) shares fell over 17% following an updated business outlook for Q4 and fiscal 2025, which included anticipated tariff impacts on imported goods [1][7] - The revised forecast indicates nearly $90 million in tariff expenses, equating to 170 basis points of net sales [1][7] Fiscal 2025 Outlook - Management now expects net sales growth of at least 6%, down from a previous forecast of 6-7% [2] - Operating margin is projected at around 13%, reduced from the earlier range of 13-13.5% [2] - Net income per share is now estimated to be between $10.30 and $10.40, slightly adjusted from $10.20 to $10.50 [2] - Capital expenditures are anticipated to rise to $245 million from the previous expectation of $225 million [2] Fourth Quarter Projections - For Q4, net sales are expected to grow around 5%, compared to the earlier forecast of 4-6% [4] - Net income per share is projected to be between $3.50 and $3.60, adjusted from $3.40 to $3.70 [4] - Operating margin is still expected to be around 14% [4] Business Performance and Strategy - The company reported record quarter-to-date net sales through December, with balanced growth across regions, brands, and channels [5] - The Hollister brand is expected to achieve mid-teens sales growth for fiscal 2025, while the namesake brand anticipates low single-digit sales growth for Q4 [5] - ANF plans to open around 100 new physical locations in fiscal 2025, including 60 new stores and 40 remodels, while closing 20 stores [3] Long-term Strategy - Management aims to enhance its operating model to drive expansion in owned-and-operated channels and improve global reach through partnerships [6] - The company is focused on creating trend-right merchandise, deepening customer relationships, enhancing digital commerce, and controlling expenses [8]