Abercrombie & Fitch Company ((ANF)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Abercrombie & Fitch Company painted a picture of robust performance, marked by record-breaking revenue growth and strategic brand successes, particularly with Hollister. While the company celebrated its achievements, it also acknowledged challenges in specific regions and the looming impact of tariffs.
Record-Breaking Revenue and Growth
Abercrombie & Fitch reported a record $1.2 billion in net sales for the second quarter, marking a 7% increase from the previous year. This achievement exceeded both top and bottom line expectations and represented the company’s 11th consecutive quarter of growth.
Strong Performance in the Americas and APAC
The Americas region continued its impressive streak with a 12th consecutive quarter of growth, achieving an 8% increase in net sales. Meanwhile, the APAC region also demonstrated strong performance, with net sales growing by 12%.
Hollister Brand Success
The Hollister brand was a standout performer, delivering record first-half sales. In the second quarter alone, Hollister’s net sales grew by 19%, driven by strong cross-channel traffic and comparable sales.
Share Repurchase Program
Abercrombie & Fitch continued its commitment to returning value to shareholders, repurchasing $50 million of stock in the second quarter. This brings the total repurchases for the year to $250 million.
Partnership with NFL
In a strategic move, Abercrombie & Fitch announced a partnership with the NFL, becoming an Official NFL Fashion Partner. This marks a first for a league sponsor and is expected to enhance brand visibility.
Decline in EMEA Performance
Despite overall growth, the EMEA region faced challenges, with net sales declining by 1%. This was attributed to softness in Germany and other European markets, contrasting with a 16% growth in the second quarter of 2024.
Abercrombie Brand Sales Decline
The Abercrombie brand experienced a 5% decline in net sales, with comparable sales down by 11%. This was primarily due to lower average unit retail as the company cleared carryover inventory.
Impact of Tariffs
Tariffs are expected to have a significant financial impact, with an estimated cost of $90 million for 2025. This is projected to affect the full-year operating margin outlook by 170 basis points.
Forward-Looking Guidance
Looking ahead, Abercrombie & Fitch has revised its full-year expectations, forecasting net sales growth of 5% to 7% and an operating margin of 13% to 13.5%. The company plans to introduce 100 new store experiences, including 60 new stores and 40 remodels or right-sizes, while factoring in the anticipated impact of tariffs.
In summary, Abercrombie & Fitch’s earnings call reflected a positive sentiment with record-breaking growth and strategic advancements, particularly with the Hollister brand. However, challenges in the EMEA region and the impact of tariffs remain areas of concern. The company’s forward-looking guidance suggests a cautious yet optimistic outlook for the coming year.