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]

Group 1 - Gap Inc. is expected to announce fiscal first-quarter earnings on May 29, 2025, with forecasts of 45 cents per share and $3.42 billion in revenue, indicating a 7% year-over-year rise in earnings and a 1% increase in sales compared to the previous year [1] - Historically, Gap stock has risen 74% of the time after earnings announcements, with a median one-day gain of 7.6% and a maximum noted increase of 31% [1][6] - For fiscal year 2025, Gap anticipates sales growth of 1% to 2% and an operating income increase of around 8% to 10%, driven by strategic investments in brand development and supply chain enhancements [2] Group 2 - The company has a market capitalization of $11 billion, with revenue for the past twelve months at $15 billion, achieving an operating profit of $1.1 billion and a net income of $844 million [2] - Investors are encouraged to monitor Gap's efforts to rejuvenate the Athleta brand and optimize both digital and brick-and-mortar retail strategies [2] - Historical data shows that positive one-day returns occurred approximately 74% of the time over the past five years, increasing to 82% over the last three years [6]

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]

Core Viewpoint - American Eagle Outfitters (AEO) is expected to report a fiscal first-quarter earnings loss of 22 cents per share and revenue of $1.09 billion, a decline from last year's earnings of 34 cents per share and revenue of $1.14 billion [1] Group 1: Earnings Forecast and Historical Performance - AEO anticipates a slight decline in sales for the entire year, expected to fall by low single digits [2] - The company has a market capitalization of $2.0 billion and reported revenue of $5.3 billion over the past twelve months, with operating profits of $445 million and net income of $329 million [2] - Historically, AEO stock has dropped 60% of the time after earnings announcements, with a median one-day decline of 5.4% and a maximum decline of 14% [1][2] Group 2: Post-Earnings Return Analysis - Over the past five years, AEO has recorded 20 earnings data points, with 8 positive and 12 negative one-day returns, resulting in positive returns approximately 40% of the time [5] - The median of the 8 positive returns is 2.4%, while the median of the 12 negative returns is -5.4% [5] - The correlation between short-term (1D) and medium-term (5D) returns can be analyzed to inform trading strategies, particularly if the 1D post-earnings return is positive [3][4]

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].

Group 1 - Abercrombie & Fitch (ANF) is expected to report fiscal Q1 earnings on May 28, 2025, with projected earnings of $1.34 per share and revenue of $1.06 billion, indicating a 37% decrease in earnings year-over-year but a 4% increase in sales compared to the previous year [1] - The company recorded full-year 2024 net sales of $4.95 billion, a 16% year-over-year increase, and achieved its highest operating margin in over a decade at 15% [2] - For 2025, net sales growth is projected to slow to 3%-5%, with operating margins expected to decrease slightly to 14%-15% due to trade tariff uncertainties [2] Group 2 - Historically, ANF stock has dropped 60% of the time after earnings announcements, with a median one-day decrease of 1.9% and a maximum decline of 10% [1] - Over the last five years, there have been 20 earnings data points for ANF, with positive one-day returns observed approximately 40% of the time, increasing to 50% in the last three years [6] - The median of positive one-day returns was 2.4%, while the median of negative returns was -1.9% [6]