Abercrombie & Fitch (ANF) Q4 FY26 earnings call: guidance and Q&A

What merchandising drivers are most exciting for 2026 growth, and how will AUR growth, price increases, and tariffs impact margins?

Fran highlighted the balanced growth across regions, brands, and channels in 2025 as proof of their working model and confidence for 2026, emphasizing their 'chasing' model. Robert detailed the tariff impact cadence (incremental in Q1/Q2, neutralizing in Q3, tailwind in Q4) and mitigation strategies including country of origin changes, supplier negotiations, and modest AUR improvement from pricing on fashion items.

“Total impact, incremental impact of about $40 million here for tariffs on a year-over-year basis. So that's roughly 70 basis points. We feel good about the mitigation strategies that we put in place here as it relates to country of origin changes, supplier negotiations, product costing.”

asked by Dana Telsey · answered by Robert Ball

What is the right growth algorithm for Hollister, and what is different about this ERP implementation compared to past ones?

Fran praised Hollister's consistent growth, driven by being 'dialed into' the teen consumer, successful product categories, and marketing. Robert explained the new ERP system replaces a 15-year-old system, enabling more efficient support for the current omni-channel business and future growth. The Q1 impact is temporary (2 weeks) and primarily affects third-party flows and chase product, with inventory pre-positioned in stores.

“The system that we -- that we're replacing was originally built and released about 15 years ago, and it was really architected for a very different business than what we're running today. This new ERP system allows us to support both the owned and operated omni business that we have as well as the expectations of growth that we have across channels and categories in a more efficient way.”

asked by Corey Tarlowe · answered by Robert Ball

How are sales growth targets managed for both brands, and what is considered normalized growth for each concept?

Fran stated the goal is to grow both brands annually, with mid-single digits being a definition of success. She emphasized the balanced performance across brands, regions, and channels in Q4 as the objective for 2026. Robert added that the Q1 sales guide reflects the ERP impact, but otherwise, the full year builds consistently on the Q4 performance, with the operating model allowing them to chase revenue.

“Mid-single digits would be a definition of success for us. We're excited to see our model working. I mean, you come out of fourth quarter where we grew the business again on top of a record and actually having another record year on top of 2024 is certainly proof that our operating model is working.”

asked by Matthew Boss · answered by Fran Horowitz-Bonadies

Clarify the ERP impact timing, update on sourcing base changes, and explain the APAC strategic review.

Robert clarified the ERP impact is concentrated in a 2-week period, causing a comp-to-noncomp compression rather than a significant sales decline. He reiterated their diversified sourcing network (16+ countries) is agile and constantly evolving, with no meaningful disruptions from the Middle East. Fran explained the APAC review is about assessing the most profitable go-to-market strategy for shareholders, given their current multi-faceted approach, with no specific timing for an outcome yet.

“We currently source from over 16 different countries. That's been obviously a core enabler for us in our Read and React model here. Approach isn't changing, Paul. We're always evolving this network to make sure that we can service our brands, help with speed, optimize costs.”

asked by Paul Lejuez · answered by Robert Ball

Update on licensing, especially kids, and international wholesale opportunities. Can product margins be rebuilt post-tariffs, or is the current level the new normal?

Fran noted positive results from the kids brand global licensing, which created a halo effect, and the recent Baby and Toddler launch. She confirmed they are exploring all concepts (licensing, wholesale, franchising) for international expansion, especially in Europe, due to strong brand interest. Robert stated the goal is to offset as much tariff impact as possible longer-term through AUR growth and continued operational excellence, emphasizing the model's durability despite various headwinds.

“We have been able to maintain these double-digit operating margins despite all of these different headwinds that we have -- we faced, whether that be supply chain disruptions, input cost inflation, inflation across all of operating expenses and now tariffs.”

asked by Marni Shapiro · answered by Robert Ball

What is the consumer reaction to recent ticket price increases, and has Q1 growth been consistent with Q4 trends?

Fran stated that initial consumer response to judicious ticket price increases on fashion items for spring has been good, while key categories like denim and opening price point t-shirts were not impacted. Robert confirmed a good start to Q1, consistent with Q4's balanced performance, despite some choppiness from winter storms. He noted that most Q1 volume is still ahead, and growth is expected across brands, with the ERP impact being a temporary headwind.

“The initial response has been good, and we're going to continue with the strategy, and we're going to continue to test and learn as we head through 2026.”

asked by Mauricio Serna Vega · answered by Fran Horowitz-Bonadies

What are the conversion trends, particularly for Abercrombie, and is the 12-12.5% operating margin the new normal, with potential upside drivers?

Robert noted conversion improvements for both Abercrombie and Hollister throughout 2025, driven by focused execution and tight inventory control, which continued into Q4. Regarding margins, he declined to provide guidance beyond 2026 but highlighted the model's consistent delivery of double-digit operating margins across various environments (freight, inflation, tariffs). He emphasized the business's strong fundamentals, cash generation, and capital allocation strategy as drivers of durable earnings growth.

“The last 3 years, we've gone through freight changes. We've had inflation, input costs from a product standpoint have fluctuated all over the board and obviously, tariffs here for the last bit. And as you think about what underpins this business, it's highly cash generative.”

asked by Janine Stichter · answered by Robert Ball