Abercrombie & Fitch beats Q1 earnings estimates as stock rises in premarket trading
Operating margins contract to 8% amid regional divergence, with Asia-Pacific sales surging 24% while EMEA revenue falls 10% due to geopolitical sentiment.
Abercrombie & Fitch reported first-quarter earnings per diluted share of $1.47, beating analyst estimates of $1.27 and driving its stock up approximately 4% in premarket trading on Wednesday. The result marks the retailer’s 14th consecutive quarter of sales growth, although net sales of $1.1 billion, a 2% increase year-on-year, fell slightly short of the $1.12 billion consensus forecast.
Profitability narrowed on a year-over-year basis, with the operating margin slipping to 8% from 9.3% in the same period last year. Regional performance showed significant divergence, with sales in the Americas rising 3% to $899.9 million and Asia-Pacific sales jumping 24% to $46.5 million.
Revenue in the Europe, Middle East, and Africa (EMEA) region fell 10% to $167.4 million. Chief Executive Officer Fran Horowitz attributed this decline to weaker consumer sentiment linked to the ongoing Middle East conflict, which particularly impacted the Hollister brand. The company stated it is proactively managing inventory and marketing to support the region.
Following the Supreme Court’s decision to strike down certain tariffs, Abercrombie & Fitch has requested approximately $100 million in refunds for duties paid under the International Emergency Economic Powers Act. The updated tariff outlook is now expected to reduce full-year results by about 20 basis points, a notable improvement from the previously forecasted 70 basis points impact.
During the quarter, the company repurchased $105 million in stock, reducing shares outstanding by 3% from the start of the year. It currently has $745 million remaining on its share repurchase authorization.
For the full year, Abercrombie & Fitch maintained its outlook for net sales growth of 3% to 5% and net income per diluted share between $10.20 and $11.00. For the second quarter, the company forecast net sales growth of 2% to 4% and earnings per diluted share of $1.80 to $2.00.
Despite the quarterly beat, ANF shares remain down more than 40% on a year-to-date basis as of the open on Wednesday.
