Abercrombie Fitch 2026 Q1 Earnings Net Income Declines 29%

Abercrombie & Fitch(ANF) reported its fiscal 2026 Q1 earnings on Jun 06th, 2025. Abercrombie & Fitch's fiscal 2026 Q1 earnings results showed a decline in net income, missing expectations. The company's guidance was adjusted downward, reflecting challenges ahead. Despite the revenue growth, the profitability metrics underscored a need for strategic adjustments to maintain performance. The company aims to navigate current pressures with agility and focus on long-term growth potential.

Revenue
Abercrombie & Fitch's total revenue saw a 7.5% increase, reaching $1.10 billion in 2026 Q1 compared to $1.02 billion in 2025 Q1. The Abercrombie segment contributed $547.95 million, while Hollister added $549.36 million, showcasing balanced growth across both divisions.

Earnings/Net Income
Abercrombie & Fitch's EPS decreased by 27.2%, down to $1.63 in 2026 Q1 from $2.24 in 2025 Q1. The net income also fell by 29.0%, reaching $81.74 million, compared to $115.08 million in the previous year. The earnings decline highlights the need for strategic adjustments.

Post-Earnings Price Action Review
The strategy of purchasing Abercrombie & Fitch shares after a revenue miss and holding for 30 days has historically resulted in substantial returns. The approach yielded a total return of 515.13%, significantly outperforming the benchmark return of 85.73%, achieving an excess return of 429.40%. The compound annual growth rate stood at an impressive 44.02%, indicating robust performance over time. However, the strategy entails considerable risk, evidenced by a high maximum drawdown of -69.83% and a Sharpe ratio of 0.71, pointing to substantial volatility with a rate of 62.05%.

CEO Commentary
Fran Horowitz, Chief Executive Officer, expressed pride in Abercrombie & Fitch's record first-quarter net sales of $1.1 billion, marking an 8% increase year-over-year. The performance was driven by strong growth across all regions and a notable 22% increase in Hollister’s sales. Horowitz acknowledged challenges faced by the Abercrombie brand, particularly due to carryover inventory impacting average unit retail (AUR), but emphasized the team's agility in responding to customer feedback and inventory management. The CEO highlighted ongoing investments in marketing and store expansion, reinforcing confidence in achieving sequential improvement and long-term growth potential despite current pressures.

Guidance
Abercrombie & Fitch revised its fiscal 2025 guidance to a net income per share of $9.50 to $10.50 and net sales growth of 3% to 6%. For Q2 2025, the company expects net income per share between $2.10 and $2.30, coupled with net sales growth of 3% to 5%. The anticipated capital expenditure for the year is approximately $200 million, with plans for about 100 new store experiences, including 60 new stores and 40 remodels or right-sizings.

Additional News
Abercrombie & Fitch has recently announced a share repurchase program, buying back 2.6 million shares for $200 million, representing a 5% reduction in outstanding shares. The company has also adjusted its fiscal 2025 guidance due to anticipated tariff impacts, expecting a $50 million hit. Additionally, Abercrombie is actively diversifying its sourcing network, reducing dependency on Chinese manufacturing and expanding partnerships with countries like Vietnam, Cambodia, and India. These strategic moves are aimed at mitigating trade-related risks and maintaining profitability amid evolving global trade policies.