Abercrombie Fitch 2026 Q1 Earnings Misses Targets as Net Income Falls 29%

Abercrombie & Fitch (ANF) reported its fiscal 2026 Q1 earnings on May 28th, 2025. The results fell short of expectations, with earnings per share (EPS) declining more than anticipated. Despite the downturn, the company's revenue guidance was slightly adjusted upwards, indicating a potential increase in future sales growth. However, the overall profit outlook was lowered, reflecting the impact of tariffs and other market uncertainties. This adjustment suggests that while Abercrombie & Fitch anticipates growth in sales, it may face challenges in maintaining profitability.

Revenue
Abercrombie & Fitch reported a 7.5% increase in total revenue for the first quarter of 2026, reaching $1.10 billion compared to $1.02 billion in the same quarter of 2025. The revenue was driven by Abercrombie's segment which contributed $547.95 million, while Hollister closely followed with $549.36 million, maintaining a balanced growth across both segments.

Earnings/Net Income
Abercrombie & Fitch's EPS declined 27.2% to $1.63 in 2026 Q1 from $2.24 in 2025 Q1. Meanwhile, the company's net income decreased to $81.74 million in 2026 Q1, down 29.0% from $115.08 million reported in 2025 Q1. The sharp decline in EPS suggests challenging financial performance this quarter.

Price Action
The stock price of Abercrombie & Fitch has tumbled 14.83% during the latest trading day, has surged 15.44% during the most recent full trading week, and has surged 23.49% month-to-date.

Post-Earnings Price Action Review
Following Abercrombie & Fitch's earnings announcement, a strategic approach of purchasing ANF shares during a revenue miss and holding for 30 days yielded a noteworthy performance. This strategy led to a substantial return of 399.98%, significantly outperforming the benchmark return of 86.09%. Despite experiencing a maximum drawdown of -70.96%, the strategy's positive Sharpe ratio of 0.64 indicated favorable risk-adjusted returns. While high volatility at 59.50% might pose challenges for risk-averse investors, the overall compound annual growth rate (CAGR) of 38.22% and excess return of 313.89% suggest that this approach could be effective for those willing to tolerate such volatility.

CEO Commentary
Fran Horowitz, Chief Executive Officer, emphasized that Abercrombie & Fitch delivered record first quarter results, driven by strong net sales of $1.1 billion, reflecting an 8% growth over the previous year. Despite challenges faced in the Abercrombie brand, where net sales declined 4%, the team remains agile, leveraging customer feedback to shift inventory and enhance product offerings. Horowitz highlighted the success of Hollister, which achieved a 22% increase in net sales, and expressed optimism about upcoming store openings and marketing investments, reinforcing the company's commitment to long-term growth and brand strength.

Guidance
For the full year, Abercrombie & Fitch expects net sales growth between 3% to 6%, projecting revenues of approximately $5.1 billion. The operating margin is guided to range between 12.5% to 13.5%, reflecting a 100 basis point impact from expected tariffs. The company anticipates earnings per share in the range of $9.50 to $10.50 and plans to invest around $200 million in capital expenditures. For Q2, net sales are expected to rise 3% to 5%, accompanied by an operating margin forecast of 12% to 13%.

Additional News
Abercrombie & Fitch has been actively engaging in share repurchase activities, with 2.6 million shares bought back for approximately $200 million during the first quarter of 2025, representing 5% of shares outstanding. This move underscores the company's commitment to returning capital to shareholders. Additionally, there has been notable insider trading activity, with several executives selling shares, including Suzanne M Coulter and Gregory J Henchel, which may indicate varied perspectives on the company's market position. In hedge fund activity, AQR Capital Management LLC notably increased its position by adding over 1.3 million shares, signifying confidence in Abercrombie & Fitch's future prospects.