Abercrombie & Fitch reported second-quarter fiscal 2026 earnings that exceeded analyst expectations, sending shares up 16.89% in premarket trading to $127.29.
Net sales for the quarter totaled $1.3 billion, up 5% from the prior-year period and surpassing forecasts of $1.25 billion. Earnings per share reached $4.17, more than doubling the $1.98 estimate and nearly doubling the adjusted EPS of $2.32 from a year earlier. Operating income rose to $253 million from an adjusted $168 million in Q2 2025, while the operating margin expanded by 600 basis points to 19.9%.
The company recorded its 15th consecutive quarter of sales growth, with Abercrombie brand net sales up 8% year-over-year and comparable sales increasing 4%. Hollister brand sales rose 2% overall, though comparable sales declined 3%. Regional performance varied, with APAC net sales up 19% and comparable sales rising 13%, while EMEA comparable sales fell 4%.
Management attributed part of the beat to approximately $100 million in tariff refunds under the IEEPA program, which added $1.75 to EPS and contributed roughly 790 basis points to the operating margin. Excluding the refund impact, the underlying business still outperformed expectations by about 200 basis points, according to executives.
Abercrombie & Fitch repurchased $177 million in shares during the quarter, bringing year-to-date buybacks to $282 million. The company maintained $568 million remaining on its current repurchase authorization and ended the quarter with $628 million in cash and cash equivalents.
For the full fiscal year 2026, management raised its net sales growth guidance to about 5% and set an operating margin target of 14.5% to 15%. EPS is now forecast at $13.10 to $13.60, up from prior guidance. Capital expenditures are expected to total about $250 million, with at least $500 million allocated for share repurchases. Full-year tariff refunds are projected at approximately $120 million, with the remaining $20 million expected in Q3.
Third-quarter guidance calls for net sales growth of 5% to 6%, an operating margin of 13% to 14%, and EPS of $2.90 to $3.20. Executives noted that Q3 will include about $20 million in tariff refunds and additional expense pressures from a new ERP system implementation.
CEO Fran Horowitz highlighted the company's balanced performance across regions and brands, while CFO Robert Ball emphasized that the underlying business outperformed expectations even after accounting for the tariff refund impact.
