Core Insights - Abercrombie & Fitch Co. (ANF) reported first-quarter fiscal 2025 results with both top and bottom lines exceeding Zacks Consensus Estimates, although year-over-year earnings per share (EPS) declined by 25.7% [1][3] Financial Performance - The company achieved net sales of $1.1 billion, reflecting an 8% year-over-year increase, surpassing the Zacks Consensus Estimate of $1.06 billion [2] - Comparable sales improved by 4%, driven by broad-based growth across regions and strong performance from the Hollister brand [2][4] - Abercrombie's EPS for the quarter was $1.59, beating the consensus estimate of $1.35 [1] Brand Performance - Hollister brand reported a 22% increase in sales to $549.4 million, while Abercrombie brand sales fell by 4% to $547.9 million [9] - Hollister's comparable sales grew by 23%, while Abercrombie's fell by 10% [9] Regional Sales - Sales in the Americas rose by 7% to $874.8 million, EMEA sales increased by 12% to $185 million, and APAC sales gained 5% to $37.5 million [8] - Comparable sales in the Americas rose by 4%, 6% in EMEA, and 2% in APAC [8] Margins and Expenses - Gross margin contracted by 440 basis points year-over-year to 62%, partially offset by a 140 basis point operating expense leverage [11] - Selling expenses increased by 11.1% year-over-year to $399.9 million, while general and administrative costs decreased by 7.7% to $174.9 million [12] Financial Health - Abercrombie ended the quarter with cash and cash equivalents of $511 million and no net long-term borrowings [13] - The company repurchased 2.6 million shares for approximately $200 million, reducing the share count by 5% [14] Outlook - For Q2 fiscal 2025, net sales are projected to rise by 3-5% from $1.13 billion in the prior year, with EPS expected between $2.10 and $2.30 [15] - For fiscal 2025, the company anticipates sales growth of 3-6%, with an operating margin of 12.5-13.5% [16][17] - Abercrombie plans to open 60 new stores, remodel 40, and close 20 [18]

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].