Abercrombie & Fitch’s stock soared more than 14% despite announcing a significant reduction in its profit outlook due to tariffs. The company reported better-than-expected earnings and revenue for the first quarter, beating Wall Street’s estimates.
Abercrombie’s new profit guidance is below expectations, with full-year earnings per share projected between $9.50 and $10.50. Analysts had anticipated higher earnings of $10.33 per share. The company also lowered its operating margin forecast to 12.5-13.5%.
Tariffs currently in effect, including a 30% tariff on Chinese imports and a 10% levy on goods from dozens of other countries, are expected to reduce Abercrombie’s earnings by $50 million.
Despite the reduced guidance, shares rose after the company reported strong sales growth across its three regions. The Hollister brand drove Abercrombie’s performance, with sales surging 22%. CEO Fran Horowitz attributed the company’s success to broad-based growth and the launch of new shops, including a wedding shop and vacation shop.
However, Horowitz acknowledged that Abercrombie’s performance fell short of expectations, citing winter inventory that needed to be discounted. The company is working to diversify its sourcing network and offset costs by collaborating with vendors.
Abercrombie expects a $70 million hit from tariffs, but plans to lower it to $50 million through mitigation efforts. Despite the challenges, Horowitz remains optimistic about the company’s long-term prospects, citing opportunities for growth in global markets and investments in new products and brands.
Source: https://www.cnbc.com/2025/05/28/abercrombie-fitch-anf-q1-2025-earnings.html