Shares of Abercrombie & Fitch slid 2.5% to $102.50 in pre-market trading on Tuesday after Raymond James downgraded the retailer to Market Perform from Outperform.
The downgrade reflects concerns over valuation following a roughly 25% rally since the company reported first-quarter fiscal 2026 results in late May. Analysts at Raymond James noted that the stock’s current valuation of about 9x earnings, while in line with the peer group average of 9.5x, no longer justifies a premium rating given mixed comparable-sales trends and soft channel checks.
The broader specialty apparel sector continues to face headwinds, including persistent tariff-related cost pressures and softness in the EMEA region and Hollister brand. These pressures are expected to weigh on margins in the near term.
U.S. equity futures pointed to a negative open as traders reacted to geopolitical developments. President Trump’s decision to reject extending a ceasefire with Iran heightened concerns over energy prices and globally sourced supply chains, adding to market caution.
Abercrombie & Fitch is scheduled to report second-quarter results on August 26, with consensus estimates projecting a quarterly earnings per share of $1.90, representing a year-over-year decline. The stock had previously rebounded from a 52-week low of $65.45, but the recent pullback underscores lingering uncertainties about its growth trajectory and margin outlook.
The S&P 500 was down 0.4% and the Nasdaq fell 1.1% in broader market trading.
