Shares of Abercrombie & Fitch Co. surged in premarket trading after the retailer reported adjusted earnings per share of $4.17 for the second quarter, well above the $1.98 consensus estimate.
The company posted revenue of $1.3 billion, a 5% increase year-over-year and ahead of the $1.25 billion estimate. Results included approximately $100 million in pre-tax refunds tied to the International Emergency Economic Powers Act (IEEPA), which contributed $1.75 per diluted share. Operating margin reached 20%, exceeding the prior outlook of around 10%.
CEO Fran Horowitz highlighted the company’s 15th consecutive quarter of growth, noting record second-quarter net sales. Franchise performance varied by region, with net sales in the Americas up 5%, Asia-Pacific up 19%, and Europe, Middle East and Africa up 2%. Both Abercrombie brands and Hollister reported record quarterly sales, rising 8% and 2% respectively, while comparable sales remained flat.
For the third quarter, Abercrombie guided for adjusted EPS of $2.90 to $3.20, above the $2.85 consensus. Net sales growth is projected at 5% to 6%. The full-year outlook was raised significantly, with adjusted EPS now expected between $13.10 and $13.60, up from the prior range of $10.20 to $11.00. The midpoint of $13.35 exceeds the $10.73 consensus. Full-year net sales growth is forecast around 5%, and the operating margin is projected at 14.5% to 15.0%, including roughly 220 basis points of benefit from IEEPA tariff refunds.
