Abercrombie soars after racking up record Q1 results, though profit forecast is slashed
The trendy Y2K retailer said its Cali sister brand Hollister helped prop up sales for the quarter.
Abercrombie & Fitch shares leapt more than 30% in early trading after the trendy Zillennial retailer dropped blockbuster first-quarter results, but the company also slashed its full-year outlook as it expects tariffs to eat into its bottom line.
Earnings per share landed at $1.59, well above the $1.36 Wall Street expected and higher than Abercrombie’s own forecast of $1.25 to $1.45. Revenue climbed to a record $1.10 billion, topping estimates of $1.05 billion. Same-store sales also beat, rising 4% compared to the 3% analysts had expected.
Despite the strong quarter, the company said it expects to take $50 million in tariff-related charges this year. Abercrombie nudged its full-year sales outlook higher, now expecting growth of 3% to 6%, up from 3% to 5%, but it cut its full-year profit EPS outlook to $9.50 to $10.50, down from its previously forecast range of $10.40 to $11.40. It also cut its operating margin forecast to 12.5% to 13.5%, down from 14% to 15%.
For the first quarter, the retailer pointed to its Cali-based sibling, Hollister, as a breakout star, with sales surging 22% to $549 million, marking the brand’s best-ever Q1. In contrast, net sales at the Abercrombie namesake brand fell 4%. While the US remains A&F’s largest market, the company saw double-digit growth across Europe, the Middle East, and Africa.
“We remain on offense and focused on top-line growth, store expansion, and investments in digital and technology that will enable sustainable long-term success,” CEO Fran Horowitz said in a statement.
Prior to the earnings pop, A&F shares were down nearly 50% year to date.
