Abercrombie & Fitch (NYSE:ANF) Q4 2026 Earnings call March 04, 2026 08:30 AM ET Company ParticipantsDana Telsey - CEO and Chief Research OfficerFran Horowitz - CEOJanine Stichter - Managing DirectorMarni Shapiro - Co-Founder and Managing PartnerMohit Gupta - VP of Investor RelationsPaul Lejuez - Managing DirectorRobert Ball - CFOScott Lipesky - COOConference Call ParticipantsCorey Tarlowe - Lead Equity AnalystJon Keypour - VP and Equity Research AnalystMatthew Boss - Managing Director and Senior Equity Anal ...

Financial Data and Key Metrics Changes - For the full year 2025, revenue grew 5.4% year-over-year, despite a 1.7% decline in comparable sales [4] - Adjusted diluted earnings per share increased by 4.5% year-over-year to $1.17 [4] - In Q4, sales grew 4.9% to reach $3 billion, with a comparable sales decline of 2.5% [25] Business Line Data and Key Metrics Changes - The company opened a record 334 new company-owned restaurants and 11 international partner-operated restaurants in 2025 [4] - Digital sales accounted for 37.2% of total sales in Q4 [25] - Restaurant-level margin was 23.4%, down 140 basis points year-over-year [25] Market Data and Key Metrics Changes - The company anticipates full-year comparable restaurant sales to be about flat for 2026, reflecting a conservative approach due to evolving consumer dynamics [26] - The company opened 132 new restaurants in Q4, including 97 Chipotles and 7 partner-operated restaurants [26] Company Strategy and Development Direction - The company is focusing on five key strategies for growth: operational excellence, brand messaging evolution, business model modernization, global expansion, and talent cultivation [8] - The company aims to solidify its foundation through a focus on operational and culinary excellence, with plans to roll out high-efficiency equipment to improve restaurant performance [9] - The company plans to increase menu innovation cadence to four limited-time offers in 2026 to drive demand [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth strategy and noted that 2025 was a year of progress and resilience despite a challenging consumer backdrop [4] - The management highlighted the importance of adapting to consumer trends, particularly the focus on value and quality [5] - Management acknowledged the impact of the recent winter storm on operations but emphasized the company's ability to respond effectively [5] Other Important Information - The company ended the quarter with $1.3 billion in cash and no debt, and it authorized an additional $1.8 billion for share repurchases [33] - The company experienced a significant increase in active rewards program members, reaching over 21 million [16] Q&A Session All Questions and Answers Question: Can you help us understand the components of the guidance for about flat comps for sales? - Management noted that the full-year guidance reflects a conservative approach due to unpredictable consumer trends, with expectations for improved comps throughout the year as initiatives drive transactions [38][39] Question: Can you provide quantification on the increased throughput from the high-efficiency package? - Management reported hundreds of basis points of improvement in comp sales at restaurants with the new equipment and confirmed plans to accelerate the rollout [40] Question: How are you thinking about limited-time offers (LTOs) and their marketing? - Management indicated that they will increase marketing spend to support four standalone LTOs and will evolve the messaging to better highlight Chipotle's unique offerings [46] Question: What is the margin outlook for the full year given the pricing and inflation dynamics? - Management expects margins to be under pressure in 2026 due to investments in pricing strategies, but they anticipate a recovery towards the end of the year [59][60]

Financial Data and Key Metrics Changes - For fiscal year 2025, the company reported a revenue growth of 16% year-over-year, reaching nearly $5 billion [7] - Gross margin expanded by 230 basis points to 57.9%, while operating margins improved by 200 basis points to 23.6% [7][36] - Earnings per share increased by 30% to $6.33 compared to the previous year [7][38] Business Line Data and Key Metrics Changes - HOKA brand revenue increased by 24% to $2.2 billion, with wholesale revenue growing 24% and DTC revenue rising 23% [11][36] - UGG brand revenue grew by 13% to $2.5 billion, with wholesale revenue increasing 15% and DTC revenue rising 11% [24][36] Market Data and Key Metrics Changes - International revenue for HOKA expanded by 39%, now representing 34% of global revenue, up from 30% last year [11] - UGG's international revenue increased by 20%, now accounting for 39% of global sales, up from 37% last year [24] Company Strategy and Development Direction - The company aims for a balanced channel mix of 50% DTC and 50% wholesale, focusing on brand-led growth and expanding international presence [9][10] - HOKA is positioned as a leading performance brand with plans to enhance product innovation and expand into lifestyle and fitness categories [19][23] - UGG is focusing on increasing adoption among male consumers and developing year-round products to capture a broader market [26][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged uncertainty due to shifting U.S. trade policy but expressed confidence in the company's ability to adapt [8] - The company expects fiscal year 2026 to face challenges, including potential tariff impacts of up to $150 million on cost of goods sold [39][41] - Despite these challenges, management remains optimistic about long-term growth prospects for both HOKA and UGG [49] Other Important Information - The company repurchased approximately $567 million worth of shares during fiscal year 2025, reflecting strong cash flow and confidence in its strategic plan [38][47] - A new board chair, Cindy Davis, was announced, succeeding Mike Devine, who retired after 14 years of service [51] Q&A Session Summary Question: What factors contributed to the slowdown in HOKA U.S. DTC? - Management noted that the slowdown was due to unique factors in the U.S. market, including model changeovers and increased promotions, but expressed confidence in international performance [55][56] Question: Is mid-teens growth for HOKA still possible? - Management indicated that while they are not providing formal guidance, they remain optimistic about mid-teens growth based on strong international performance and brand awareness [60][64] Question: Can you elaborate on the impact of tariff costs? - The $150 million tariff cost is a gross estimate, and management is exploring pricing adjustments and cost-sharing strategies to mitigate the impact [75][76] Question: How will HOKA's growth be split between DTC and wholesale? - Management emphasized that the growth framework includes strategic expansion of wholesale distribution, which is expected to drive consumer engagement and brand awareness [81][82]

Financial Data and Key Metrics Changes - For fiscal year 2025, the company reported a revenue increase of 16% year-over-year, reaching nearly $5 billion [7][35] - Gross margin expanded by 230 basis points to 57.9%, while operating margins improved by 200 basis points to 23.6% [7][35] - Earnings per share (EPS) increased by 30% year-over-year to $6.33 [7][38] Business Line Data and Key Metrics Changes - HOKA brand revenue grew 24% year-over-year to $2.2 billion, with wholesale revenue also increasing by 24% [12][35] - UGG brand revenue increased by 13% to $2.5 billion, with wholesale revenue rising by 15% [23][35] - Direct-to-consumer (DTC) revenue for HOKA increased by 23%, while UGG's DTC revenue rose by 11% [12][23] Market Data and Key Metrics Changes - International revenue for HOKA expanded by 39%, now representing 34% of global revenue, up from 30% last year [12] - U.S. revenue for HOKA rose by 17%, totaling just under $1.5 billion [12] - UGG's international revenue grew by 20%, now accounting for 39% of global sales, up from 37% last year [23] Company Strategy and Development Direction - The company aims for a balanced channel mix of 50% DTC and 50% wholesale, focusing on brand-led growth and innovation [10][11] - HOKA is positioned as a leading performance brand with plans to expand its market share through innovation and increased brand awareness [19][22] - UGG is focusing on increasing adoption among male consumers and developing year-round products to capture a broader market [25][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty in the macroeconomic environment and its potential impact on consumer spending [29][31] - The company expects to face challenges in fiscal year 2026 due to tariff impacts, estimating an increase of up to $150 million in cost of goods sold [39][41] - Despite these challenges, management remains confident in the long-term growth potential of both HOKA and UGG brands [29][41] Other Important Information - The company repurchased approximately $567 million worth of shares during fiscal year 2025, reflecting strong cash flow generation [38][47] - A new board chair, Cindy Davis, was announced, succeeding Mike Devine [51] Q&A Session Summary Question: About the slowdown in HOKA U.S. DTC - Management noted that the slowdown was due to several unique factors affecting the U.S. market, but international DTC performance remained strong [54][56] Question: Potential for mid-teens growth for HOKA - Management expressed confidence in HOKA's growth potential, emphasizing that the brand's international growth would likely outpace U.S. growth [60][66] Question: Transition to new models and tariff costs - Management confirmed that the $150 million tariff cost is a gross number, with potential mitigations through pricing strategies [76][78]