"Hollister Carries Abercrombie's Earnings as Main Brand Slides"

Abercrombie & Fitch Co. (ANF) shares surged 18% in premarket trading on Nov. 25 after the retailer reported third-quarter earnings that exceeded expectations, fueled by robust performance from its Hollister brand. The company posted adjusted earnings of $2.36 per share, surpassing the $2.16 estimated by analysts, while revenue rose 7% year-over-year to $1.29 billion, matching Wall Street forecasts . The results marked the 12th consecutive quarter of sales growth for the apparel giant .

The standout performer was Hollister, which saw sales climb 16% to $673.27 million, driven by strong demand during the back-to-school season and fall transitions. Comparable store sales for Hollister grew 15%, a stark contrast to the Abercrombie brand, which reported a 2% sales decline to $617.35 million, with comparable sales dropping 7% . CEO Fran Horowitz attributed the Abercrombie brand's struggles to inventory challenges and markdowns, though she emphasized that Hollister would anchor the company's holiday sales strategy .

Despite the Abercrombie brand's softness, Abercrombie & Fitch raised its full-year net sales guidance to 6%-7% growth, up from the prior 5%-7% range, and narrowed its earnings per share forecast to $10.20-$10.50, above the $10.06 consensus estimate . The company also maintained a 13.0%-13.5% operating margin outlook, though its Q3 margin dipped to 12.0% due to 210 basis points of adverse tariff impacts . Share repurchases continued to support shareholder returns, with $100 million spent in the quarter, bringing year-to-date buybacks to $350 million .

Analysts noted that the results highlight a strategic shift, with Hollister now carrying the bulk of growth responsibilities. "Hollister's performance demonstrates" the brand still has appeal with younger shoppers, citing the 15% comparable sales growth as evidence of strong traffic and conversion rates . However, broader retail headwinds, including inflation and cautious consumer spending, remain a concern. The National Retail Federation forecasts $1 trillion in holiday spending, but growth is expected to slow to 6% from 14% in 2024, reflecting frugal shopper behavior .

Abercrombie & Fitch's fourth-quarter guidance-4%-6% sales growth and EPS of $3.40-$3.70-aligns with but slightly trails analyst expectations of 5.6% revenue growth and $3.55 per share . The stock's sharp rebound follows a 56% decline in 2025, driven by weak discretionary spending and tariff pressures . While the company's updated outlook reflects confidence in its holiday push, investors will scrutinize management's plans to revitalize the Abercrombie brand during the earnings call.

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