Abercrombie's Sales Strength, Hollister Momentum Offset Tariff Pressure, Analyst Says

Telsey Advisory Group analyst Dana Telsey maintained an Outperform rating on Abercrombie & Fitch (NYSE: ANF) on Thursday, with a price forecast of $125.

On Wednesday, the retailer reported first-quarter adjusted EPS of $1.59, beating the street estimate of $1.40, and sales of $1.1 billion outpaced the analyst consensus estimate of $1.08 billion.

Abercrombie & Fitch revised FY25 guidance for net sales growth to 3% to 6% (from 3% to 5% prior) and EPS to $9.50 to $10.50 (from $10.40 to $11.40) vs. street view of $10.75.

Despite mitigation efforts, the full-year outlook includes an estimated $50 million (100 basis points of net sales) in tariff expenses.

The analyst writes that the first-quarter sales beat, driven particularly by Hollister, was encouraging, as was the raised sales growth outlook for the full fiscal year 2025.

The analyst adds that these results and the updated outlook suggest that the company effectively utilizes its flexible operating model to adjust its offerings to meet customer demand rapidly.

Also, the analyst believes the moderated full-year operating margin outlook (reduced by 150 basis points at both ends of the previous range) was better than market fears and now accounts for tariff impacts.

Consequently, the analyst views quarterly results and the updated outlook as a positive initial step in rebuilding investor confidence in ANF’s profitability potential.

Telsey now sees FY25 comparable sales growth of 3.1% vs. 2.0% prior and consensus of growth of 2.5% and EPS of $10.30 (down from $11.35 earlier) vs. street view of $10.44.

Price Action: ANF shares are down 6.5% at $82.81 at last check Thursday.

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