Key Takeaways:
Abercrombie & Fitch reported Q2 adjusted EPS of $4.17, more than double the $1.99 consensus, sending shares up 37% to $148.91 in mid-morning trading.
"We delivered record second quarter net sales and our 15th consecutive quarter of growth," CEO Fran Horowitz said.
Net sales rose 5% to $1.27 billion, ahead of the $1.24 billion consensus. Operating margin came in at 19.9%, against 13.9% adjusted a year earlier. The results included a $100 million pre-tax IEEPA tariff refund booked as a reduction of cost of sales, contributing $1.75 per diluted share.
Abercrombie raised its full-year outlook to $13.10 to $13.60 per diluted share from $10.20 to $11.00, with 220 basis points of the margin upgrade tied to the refund. The stock had been down 13% year to date through Tuesday's close, so the session reprices a name the market had already written down.
By brand, Abercrombie net sales rose 8% and Hollister rose 2%, with both banners setting second-quarter records. Abercrombie brand comparable sales grew 4%, returning to positive comps, while Hollister comps declined 3%. Companywide comparable sales were flat, so reported growth is carried by average-unit-retail gains and new stores rather than traffic through the existing base.
By region, Asia Pacific net sales grew 19% with comparable sales up 13%, Americas grew 5%, and EMEA rose 2%. The APAC strength is the piece of the quarter that would survive without the refund.
The tariff mechanic is identical across the apparel group, but the demand stories diverge. Ross Stores, which priced in its own refund last week, is down 0.5% to $240.09 after running to a 34% year-to-date gain. Kohl's is up 0.4% to $17.75 despite reporting the same windfall and raised guidance, with investors reluctant to reward a tariff benefit bolted onto a still-declining top line. The SPDR S&P Retail ETF is up 1% to $88.58.
The raised outlook points to management's expectation that momentum continues into the back half, with third-quarter EPS guided to $2.90 to $3.20 on 5% to 6% sales growth. Investors will watch whether Abercrombie holds its gains through the close, since a 37% single-session move on a name that was negative year to date invites profit-taking, and whether comparable sales turn positive next quarter.
This article is for informational purposes only and does not constitute investment advice.
