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    ANF
    Earnings call· Apr 2026(Q1 FY27)

    ABERCROMBIE & FITCH CO /DE/ Q1 FY27 earnings call ANF

    May 27, 2026 Source

    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

    5

    • 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

    4

    • 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

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

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    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——

    Operational metrics

    20
    Net Sales
    $1.1 billionup 2%
    Q1 FY27

    Record Q1 net sales, within the guidance range of 1% to 3%.

    Comparable Sales
    -1%
    Q1 FY27

    Total company comparable sales.

    Operating Income
    $89 millionvs $102 million last year
    Q1 FY27

    Exceeded plan, contributing to 8% operating margin.

    Adjusted EBITDA
    $131 millionvs $140 million last year
    Q1 FY27

    Adjusted EBITDA margin was 12% of sales.

    Adjusted EBITDA Margin
    12%
    Q1 FY27

    On adjusted EBITDA of $131 million.

    Operating Margin Decline YoY
    130YoY
    Q1 FY27

    Primarily driven by increased marketing investment and ERP implementation costs.

    Tariff Pressure
    180YoY
    Q1 FY27

    Year-over-year tariff pressure was fully offset by favorable freight costs.

    Freight Costs Impact on Gross Margin
    180YoY
    Q1 FY27

    Favorable freight costs fully offset tariff pressure in Q1.

    Tax Rate
    28%
    Q1 FY27

    Higher than outlook primarily due to jurisdictional mix of income.

    Cash and Cash Equivalents
    $594 million
    Q1 FY27 end

    Exited the quarter with strong cash position.

    Liquidity
    $1 billion
    Q1 FY27 end

    Total liquidity at quarter end.

    Marketable Securities
    $25 million
    Q1 FY27 end

    Balance at quarter end.

    Net Sales Growth Impact from Middle East
    >50
    Q1 FY27

    Reduced total company net sales growth relative to outlook.

    Net Sales Growth Impact from ERP Implementation
    100
    Q1 FY27

    Negatively impacted top line growth due to proactively limited third-party orders; normal operations resumed in April.

    Average Unit Retail (AUR) Growth
    low single-digit
    Q1 FY27

    Across brands, indicating product acceptance and customer value perception.

    Unit Growth
    low single-digit
    Q1 FY27

    Across brands, alongside AUR growth.

    Foreign Currency Impact on Net Sales
    40
    FY26

    Anticipated favorable impact for the full year.

    Q2 Unfavorable Tariff Impact
    $20 million
    Q2 FY27

    Net of mitigation efforts, contributing to Q2 operating margin outlook.

    Q2 Freight Impact on Gross Margin
    slightly favorable
    Q2 FY27

    Expected to normalize compared to Q1's significant tailwind.

    Q2 Operating Expense Deleverage Drivers
    —
    Q2 FY27

    Coming from incremental marketing, stores, and incentive compensation.

    Industry KPIs

    7
    MetricValueDetails
    Comparable sales-1%%
    Store count growth50stores
    Gross margin driversmodest expansion
    Share buyback capital return$105 millionUSD
    Inventory position markdown risk-2%%
    Same sku like for like inflationlow single-digit%
    Distribution supply chain cost economics180bps

    Product announcements

    4
    ProductTypeDetails
    Abercrombie Baby and Toddlerlaunch
    Sperry Collaborationlaunch
    Kappa Collaboration (Hollister)launch
    New Abercrombie & Fitch SoHo Storeexpansion

    Deals & partnerships

    3
    SperryRenewed 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.

    KappaCollaboration 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 partnersDeveloping 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

    7
    Middle East Conflict Impact on EMEA SalesQ1 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 GrowthQ1 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 InvestmentQ1 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 CostsQ1 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 RateQ1 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 CostsH2 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 UptickOngoing

    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

    5

    EMEA Sales Trend Improvement

    next quarter
    CurrentDeclined 10% in Q1 FY27
    TargetImproved 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.

    Q&A highlights

    5

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.