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What Happened?
Shares of young adult apparel retailer Abercrombie & Fitch (NYSE:ANF) jumped 23.5% in the morning session after the company reported impressive first-quarter 2025 results, which beat analysts' sales and EPS expectations.
The outperformance was led by a 22% growth in Hollister, even as Abercrombie's own brand posted a 4% decline. Even with the boost in sales, profits took a hit. The cost of goods and other expenses climbed, pulling margins down and cutting into the bottom line.
Looking ahead, the company's EPS guidance for the full year was reduced and fell short of Wall Street's expectations. This guidance includes the estimated impact from tariffs that are currently in effect, including a 30% tariff on imports from China and a 10% one on goods from many other countries. It excludes other currently paused tariffs.
Overall, the quarter itself was quite solid. The market seems to be forgiving the reduced full-year EPS guidance as we've seen many retailers report worse quarters.
Additionally, shares were down roughly 50% year-to-date heading into the print, reflecting lowered expectations.
The shares closed the day at $88.47, up 14.7% from previous close.
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What The Market Is Telling Us
Abercrombie and Fitch’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. But moves this big are rare even for Abercrombie and Fitch and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock gained 27% on the news that the company reported a "beat and raise" quarter. First quarter results blew past analysts' revenue and EPS expectations, driven by its insanely high 21% year-on-year same-store sales growth (vs analysts' estimates of 12%). The sales performance was broad-based with Abercrombie brands up 31% while Hollister brands delivered growth of 12%.
On the back of the strong print, the company raised its full-year revenue guidance from 5% growth at the midpoint to 10%, a massive jump. Zooming out, we think this was a fantastic quarter that shareholders will appreciate.
Abercrombie and Fitch is down 42.4% since the beginning of the year, and at $88.30 per share, it is trading 54.1% below its 52-week high of $192.34 from June 2024. Investors who bought $1,000 worth of Abercrombie and Fitch’s shares 5 years ago would now be looking at an investment worth $7,612.
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