Abercrombie & Fitch reported second-quarter fiscal 2026 earnings that exceeded expectations, driven in part by tariff refunds and strong operational performance. The company posted earnings per share of $4.17, a 111% increase from $1.98 a year earlier and well above the $1.98 consensus estimate. Revenue rose 5% year-over-year to $1.27 billion, topping the $1.25 billion consensus by $20 million.
Operating margin expanded to 19.9%, a 990-basis-point improvement from prior guidance of roughly 10%. The company attributed 790 basis points of this gain to a $100 million refund under the International Emergency Economic Powers Act (IEEPA) tariff program, which added $1.75 per share. Excluding the tariff impact, underlying operating margin still outperformed by approximately 200 basis points, reflecting broad-based strength in the business.
Regional performance showed divergent trends, with Americas sales up 5% and Asia-Pacific sales surging 19% year-over-year. Hollister brand sales grew 2%, though comparable-store sales declined 3%, primarily due to weakness in Europe, the Middle East and Africa. Management noted improving trends in August, with second-half comparisons expected to ease.
Abercrombie raised its full-year operating margin target to 14.5%-15%, up from prior guidance. The company expects total IEEPA tariff refunds of $120 million for fiscal 2026, or about $2.10 per share, with the remaining $20 million ($0.35 per share) anticipated in the third quarter.
Shareholder returns remained a priority, with $282 million repurchased in the first half of the year. The company reaffirmed its full-year target of at least $500 million in buybacks under its ongoing share repurchase program.
For the third quarter, Abercrombie guided earnings per share between $2.90 and $3.20, compared with a consensus estimate of $2.85. Sales growth is projected at 5%-6% year-over-year. The company also highlighted progress in its enterprise resource planning system, which had previously constrained growth by about 100 basis points but was fully implemented by March 2026.
Looking ahead, Abercrombie plans to open approximately 130 new store experiences in 2026, including 50 new stores and 80 remodels, alongside the renovation of its SoHo flagship location.
