Can you discuss monthly trends in Q1, quarter-to-date trends, expectations for Hollister's comp performance given tough prior-year comps, and the current promotional environment?

Q1 trends continued into Q2, with an expectation of 2% to 4% acceleration for Q2. Hollister is expected to grow for the full year, despite a 22% two-year stack in Q1, driven by strong categories. The promotional strategy remains unchanged, with positive AUR growth indicating strong product acceptance and controlled inventory. “The Q1 trends have continued, and it's really built into our outlook of plus 2% to 4%. We were straight down the fairway for Q1, and we're excited to see some potential acceleration expecting 2% to 4% for the quarter.”

Is Hollister in chase mode for inventory, are there increased costs associated with this, what is the update on YPB, and is there a shift towards more dressed-up items in men's fashion?

Hollister is actively in chase mode, leveraging its global supply chain to respond quickly to demand, with no significant additional costs currently impacting this strategy. YPB has seen nice business and acceleration this year. The men's assortment is balanced, catering to both casual and more dressed-up consumer preferences. “Yes, it's exciting. We run the business in chase mode and Hollister is definitely in chase mode. We've had exciting things happening in that business, and the team is going after them.”

What drives the acceleration to meet the full-year sales guidance given a slower Q1 and Q2 outlook, and can you break down the offsets to the tariff benefit in the EBIT margin outlook (freight and marketing)?

The full-year sales acceleration is supported by the completion of ERP (recovering 100 bps impact) and continued strength in Americas/APAC, offsetting EMEA headwinds. For EBIT margin, tariffs will be a slight headwind (tens of bps) for the full year, freight will also be a slight headwind (tens of bps) due to H2 increases, and modest AUR growth is largely funding marketing and store investments, maintaining the 12-12.5% operating margin. “We had the 100 basis points of ERP impact that will come back to us. So we've got the building blocks to kind of keep us right in that range of that 3% to 5% on the full year.”

ANF

Abercrombie & Fitch (ANF) Q1 FY27 earnings call: guidance and Q&A

Earnings call· Apr 2026 (Q1 FY27)· Consumer Discretionary· May 27, 2026

Source: earnings call transcript

Executive summary

Abercrombie & Fitch Co. Q1 FY27 — Record Sales and Strong Profitability Despite EMEA Headwinds

Abercrombie & Fitch delivered a strong first quarter, achieving record net sales and exceeding profit expectations, driven by robust performance in the Americas and APAC. The company successfully navigated geopolitical headwinds in EMEA and completed a major ERP implementation, positioning it for continued growth. Management remains confident in its full-year outlook, emphasizing strategic investments and shareholder returns.

Highlights

Delivered record net sales of $1.1 billion, up 2% year-over-year, marking the 14th consecutive quarter of growth.
Operating margin of 8% exceeded plan, reflecting slightly lower tariff rates.
Earnings per share of $1.47 was above the expected range.
APAC net sales grew 24% year-over-year, building on 5% growth from the prior year.
Returned $105 million to shareholders through share repurchases, representing 3% of shares outstanding.

Concerns

EMEA sales declined 10% year-over-year, primarily due to the Middle East conflict, reducing total company net sales growth by over 50 basis points.
ERP implementation negatively impacted Q1 top-line growth by approximately 100 basis points.
Operating margin saw a 130 basis point year-over-year decline, driven by 90 basis points of increased marketing investment and 90 basis points of ERP implementation costs.
The tax rate for the quarter was 28%, higher than outlook due to the jurisdictional mix of income.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year Net Sales Growth	3% to 5% high materiality	FY26	High
Full-year Operating Margin	12% to 12.5% high materiality	FY26	High
Full-year Tax Rate	around 30% medium materiality	FY26	Medium
Full-year Diluted Weighted Average Shares	around $44 million low materiality	FY26	Medium
Full-year Earnings Per Diluted Share	$10.20 to $11 high materiality	FY26	High
Full-year Capital Expenditures	around $225 million medium materiality	FY26	High
Full-year New Stores	50 medium materiality	FY26	High
Full-year Remodels and Right Sizes	80 medium materiality	FY26	High
Full-year Net Store Openings	net store openers medium materiality	FY26	High
Full-year Share Repurchases	around $450 million high materiality	FY26	High
Q2 Net Sales Growth	up 2% to 4% high materiality	Q2 · FY27	High
Q2 Operating Margin	around 10% high materiality	Q2 · FY27	High
Q2 Tax Rate	around 32% low materiality	Q2 · FY27	Medium
Q2 Diluted Weighted Average Shares	around $45 million low materiality	Q2 · FY27	Medium
Q2 Share Repurchases	at least $150 million medium materiality	Q2 · FY27	High
Q2 Earnings Per Diluted Share	$1.80 to $2 high materiality	Q2 · FY27	High
Tariff Rate Assumption (H2 FY26)	15% medium materiality	H2 FY26	High
Tariff Rate Assumption (Q2 FY26)	10% medium materiality	Q2 · FY27	High
Full-year Gross Margin Pressure from Tariffs	around 20 basis points medium materiality	FY26	High
IEPA Tariff Refunds Applied For	around $100 million low materiality	Ongoing	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Americas Saw growth across brands and good traffic levels in both stores and digital. Both Abercrombie and Hollister brands grew in the Americas. Comparable sales: up 1%	—	3%	—	—
EMEA Continued growth in the U.K. was more than offset by declines in the Middle East and other European markets due to regional conflict. Hollister Brands were particularly impacted. Comparable sales: declined 11%	—	-10%	—	—
APAC Growth on top of 5% growth last year. Strategic evaluation of the region is underway. Both Abercrombie and Hollister brands grew in APAC. Comparable sales: up 15%	—	24%	—	—
Abercrombie Brands Delivered positive AURs on solid customer response to spring assortment, with consistent traffic and conversion. Saw balanced growth across genders in Americas and U.K. This is the second consecutive quarter of net sales growth. Comparable sales: flatAURs: positive	—	3%	—	—
Hollister Brands Net sales were flat to last year's record. Growth in Americas and APAC was offset by softer demand trends in the Middle East and select European markets. Saw positive traffic across stores and digital in Americas and APAC. Comparable sales: declined 2%AUR: slight improvement	—	flat	—	—

Product announcements

Product	Type	Timeline
Abercrombie Baby and Toddler	launch	—
Sperry Collaboration	launch	—
Kappa Collaboration (Hollister)	launch	—
New Abercrombie & Fitch SoHo Store	expansion	next week

Deals & partnerships

Sperry Renewed collaboration for footwear and apparel collection.

Team-up to renew a relationship first established in the 1930s, launching a collection of footwear and apparel across both men's and women's product. Initial launch exceeded internal expectations.

Kappa Collaboration on a collection of men's and women's sportswear.

Hollister partnered with Kappa, an Italian sportswear brand with a deep connection to international football, for a collection of pieces for the upcoming World Cup.

New global partners Developing new franchise, wholesale, and licensing relationships.

Looking beyond owned and operated channels to develop new franchise, wholesale, and licensing relationships, supported by the upgraded ERP.

Risks & headwinds

Middle East Conflict Impact on EMEA Sales Q1 FY27, expected to continue in Q2 and full year FY26

Reduced Q1 total company net sales growth by >50 basis points; EMEA sales down 10% YoY; particularly impacted Hollister Brands.

Mitigation:Adjusting inventory levels, dialing in promotions, staying close to demand in the region.

ERP Implementation Impact on Top-line Growth Q1 FY27

Negatively impacted Q1 top-line growth by ~100 basis points.

Mitigation:Implementation is complete, normal operations resumed in April, expected to be a long-term enabler.

Increased Marketing Investment Q1 FY27, front-loaded in H1 FY26

90 basis points impact on operating margin in Q1.

Mitigation:Strategic investment in a growing business, funded by AUR growth, to drive long-term growth.

ERP Implementation Costs Q1 FY27

90 basis points impact on operating margin in Q1.

Mitigation:One-time costs associated with a strategic, multi-year effort now complete, expected to yield long-term benefits.

Higher Tax Rate Q1 FY27, Q2 FY27

Q1 tax rate of 28% (higher than outlook); Q2 expected around 32%.

Mitigation:Due to jurisdictional mix of income, managed within full-year outlook of ~30%.

Elevated Freight Costs H2 FY26

Expected to be a headwind in H2 FY26 (tens of basis points).

Mitigation:Offsetting tariff relief, but overall managed within the full-year operating margin guidance.

Raw Material Cost Uptick Ongoing

Slight uptick on synthetics.

Mitigation:Reflected in business planning and guidance; confident in sourcing team's ability to navigate dynamics.

What to watch in Q2 FY27

EMEA Sales Trend Improvement

next quarter

Current Declined 10% in Q1 FY27

Target Improved trend, particularly for Hollister Brands

Why it matters

EMEA is a significant region facing geopolitical headwinds, and its recovery is crucial for overall growth and profitability.

We'll obviously navigate the Middle East dynamic here as we move through in the near term, but nothing changing in terms of our long-term belief and opportunity in the region for our brands.

Find out whether ANF delivers this. Inve re-checks your case every morning.

Q&A highlights

How much did the Middle East conflict impact sales, how is it being managed, is the ERP implementation complete, and what is the consumer sentiment for both Abercrombie and Hollister?

The Middle East conflict impacted Q1 total sales by 50 basis points, with similar expectations for Q2 and full year, managed by adjusting inventory and promos. The ERP implementation is complete and strengthens the foundation for new channels. Consumer sentiment is strong, with customers responding positively to assortments, leading to growth in both brands, particularly in the Americas.

“So impact on the quarter was about 50 basis points to the total versus the outlook that we put out there in March. Really expecting more of the same as we move throughout the balance of the season.”

asked by Dana Telsey · answered by Robert Ball

2 min read 6 chapters

Detailed narrative

ERP Implementation and Strategic Investments

The company successfully launched its upgraded merchandising ERP in March, a multi-year effort now complete. This new technology is expected to accelerate capabilities for onboarding new global partners, channels, and geographies, strengthening the digital foundation. Management views this as a key enabler for long-term channel and category expansion. Strategic investments also continue in marketing, digital, and stores to drive profitable growth.

Geopolitical Headwinds in EMEA

The Middle East conflict significantly impacted EMEA sales, which declined 10% for the quarter and reduced total company net sales growth by over 50 basis points. This particularly affected Hollister Brands. Management is actively managing the situation by controlling receipts and adjusting promotions to align with demand, applying a proven playbook to mitigate the impact. The U.K. market, however, continued to show growth.

Brand Performance and Consumer Response

Abercrombie Brands delivered 3% net sales growth with flat comparable sales and positive average unit retail (AUR) growth, driven by strong customer response to spring assortments. Hollister Brands' net sales were flat, with a 2% comparable sales decline, primarily due to EMEA pressures, but saw positive traffic and slight AUR improvement in the Americas and APAC.

Both brands are seeing balanced growth in the Americas, with strong performance in categories like fleece, denim, and woven.

AI Integration and Future Capabilities

Abercrombie & Fitch is actively integrating AI across its business, from customer care functions to business models like forecasting and inventory. The entire team is undergoing an 'AI Academy' and has access to copilot premium. The company is testing new ways to leverage AI to create more seamless customer experiences and increase the quantity and quality of customer relationships globally, supported by its upgraded ERP system.

Capital Allocation and Shareholder Returns

The company maintains a strong balance sheet, ending Q1 with $594 million in cash and $1 billion in liquidity. It repurchased $105 million worth of shares in Q1, representing 3% of shares outstanding. For the full year, the company targets returning $450 million to shareholders through share repurchases, with at least $150 million planned for Q2, demonstrating a commitment to consistent shareholder value creation.

Tariff and Freight Cost Dynamics

Lower tariff rates and mitigation efforts led to modest year-over-year gross margin expansion in Q1, with 180 basis points of tariff pressure fully offset by favorable freight costs. For the full year, updated tariff assumptions (15% in H2, 10% in Q2) are expected to result in only 20 basis points of gross margin pressure, an improvement from the prior 70 bps outlook.

However, this relief is anticipated to be offset by elevated freight costs and continued investments.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.