Core Insights - Abercrombie & Fitch Inc. (ANF) reported record net sales of $1.1 billion for Q1 fiscal 2025, an 8% increase year over year, but experienced a significant decline in gross margin by 440 basis points due to high freight costs and markdowns on winter inventory [1][9] - The company faces a $50 million margin headwind for fiscal 2025 due to a 10% tariff on all global U.S. imports and a 30% tariff on Chinese imports, impacting profitability despite efforts to adjust sourcing and negotiate with vendors [2] - The Hollister brand outperformed expectations with a 22% net sales growth, which helped mitigate a 4% decline in Abercrombie brand sales, attributed to promotional pressures and tough comparisons from the previous year [3][9] Financial Performance - ANF's operating margin decreased to 9.3% from 12.7% a year ago, reflecting the strain on gross margins [1] - The forward price-to-earnings ratio for ANF is 7.32X, significantly lower than the industry average of 17.32X, indicating potential undervaluation [10] - The Zacks Consensus Estimate indicates a projected decline of 4.9% in ANF's earnings for 2025, with a slight recovery expected in 2026 with a growth estimate of 3.9% [11] Future Outlook - Management anticipates sequential improvement in gross margin as freight costs ease and carryover inventory is reduced, although challenges remain due to tariffs [4] - The company's strong brand equity, flexible supply chain, and disciplined inventory management are seen as key factors that could help navigate current market pressures [4] Industry Context - Peers such as American Eagle Outfitters (AEO) and Gap Inc. (GAP) are also facing similar cost pressures and are implementing agile supply chain strategies to protect margins [5][6][7]

Shares of Abercrombie & Fitch (ANF 14.10%) are flying higher on Wednesday. The company's stock had gained 15% as of 2:36 p.m. ET. The jump came as the S&P 500 and the Nasdaq Composite were mostly flat.The clothing retailer reported its first-quarter numbers before the market opened on Wednesday, beating Wall Street targets.A positive quarter despite tariffsAbercrombie released its Q1 earnings, revealing a strong quarter and guidance even in the face of tariff uncertainty. The company delivered earnings per ...

Record first quarter net sales of $1.1 billion, up 8% from last year, exceeding outlookNet sales growth across regions, with Americas up 7%, EMEA up 12% and APAC up 5%Brand performance led by Hollister brands’ growth of 22% with Abercrombie brands down 4% compared to last yearProfitability exceeds company outlook with operating margin of 9.3%, earnings per share of $1.59Repurchased 2.6 million shares for $200 million, representing 5% of shares outstanding at February 1, 2025 NEW ALBANY, Ohio, May 28, 2025 ( ...