Abercrombie & Fitch Co. (ANF) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A session indicate a positive outlook. The company shows strong growth across brands, positive consumer sentiment, and strategic investments in AI and technology. Despite challenges in EMEA, the company manages inventory and promotions effectively. The strategic review in Asia and successful product collaborations further bolster confidence. The guidance for continued growth and disciplined financial management supports a positive sentiment, likely resulting in a stock price increase of 2% to 8% over the next two weeks.
Key Financial Performance
Net Sales Record net sales of $1.1 billion, up 2% year-over-year. Growth driven by strong performance in the Americas (+3%) and APAC (+24%), offset by a 10% decline in EMEA due to regional conflicts in the Middle East and other European markets.
Operating Margin 8%, exceeding the plan due to slightly lower tariff rates. This represents a 130 basis point year-over-year decline, primarily driven by increased marketing investment and ERP implementation costs.
Earnings Per Share (EPS) $1.47, above the expected range. This is a decrease from $1.59 last year, attributed to higher tax rates and ERP implementation costs.
Comparable Sales Down 1% year-over-year. By region: Americas (+1%), APAC (+15%), and EMEA (-11%). Declines in EMEA were due to the Middle East conflict.
Abercrombie Brands Net Sales Up 3% year-over-year on flat comparable sales. Growth attributed to positive customer response to spring assortments and balanced growth across genders in key markets like the Americas and the U.K.
Hollister Brands Net Sales Flat year-over-year on a 2% decline in comparable sales. Growth in the Americas and APAC was offset by declines in EMEA due to softer demand trends.
Inventory Inventory at cost down 2% year-over-year. Units up low single digits, reflecting planned investments to support growth while adjusting receipts in softer regions like the Middle East.
Adjusted EBITDA Margin 12% of sales, down from 13% last year. Decline driven by increased marketing and ERP implementation costs.
Cash and Cash Equivalents $594 million at the end of Q1, with liquidity of approximately $1 billion.
Share Repurchases $105 million worth of shares repurchased during the quarter, representing 3% of shares outstanding at the beginning of the year.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Abercrombie Baby & Toddler: New product category introduced to serve customers, expanding the brand's offerings.
Sperry Collaboration: Renewed partnership with Sperry for a collection of footwear and apparel, exceeding internal expectations.
Hollister and Kappa Collaboration: Partnership with Kappa for a collection of men's and women's pieces, targeting World Cup-related demand.
Americas: Net sales grew 3% with strong traffic in stores and digital channels.
EMEA: Sales declined 10% due to regional conflicts, with actions taken to control receipts and promotions.
APAC: Sales grew 24%, with a strategic evaluation underway to capitalize on the market potential.
Merchandising ERP Upgrade: Successfully launched an upgraded ERP system to enable long-term channel and category expansion.
Marketing and Digital Investments: Continued strategic investments in marketing, digital, and stores to drive profitable growth.
Inventory Management: Disciplined inventory management with adjustments in regions facing softer demand.
AI and Technology Integration: Testing AI advancements to enhance customer engagement and operational efficiency.
Franchise and Licensing Expansion: Exploring new franchise, wholesale, and licensing relationships to reach more customers.
Store Expansion: Opening new stores, including an expanded Abercrombie & Fitch store in SoHo, to support long-term growth.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Middle East and EMEA Market Challenges: Declines in sales in the Middle East and other European markets due to regional conflicts, leading to a 10% drop in EMEA sales for the quarter. This has been identified as a significant headwind impacting overall company performance.
Tariff Pressures: The company faces tariff pressures, with an assumed 15% tariff on all global imports into the U.S. for the second half of the year, causing around 20 basis points of gross margin pressure for the full year.
ERP Implementation Impact: The implementation of the upgraded merchandising ERP temporarily limited certain third-party orders, negatively impacting top-line growth by approximately 100 basis points during the first quarter.
Economic and Demand Trends in EMEA: Softer demand trends in the Middle East and select European markets have particularly impacted the Hollister Brands business, contributing to a decline in regional performance.
Freight Costs: Elevated freight costs are expected to offset some of the relief from lower tariff rates, adding pressure to the company's gross margins.
Marketing and Store Investment Costs: Increased marketing investments and store-related expenses have contributed to a 130 basis point year-over-year decline in operating margin.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Full Year 2026 Net Sales Growth: Expected to grow in the range of 3% to 5% from $5.27 billion in 2025, with growth anticipated across brands. The Americas are expected to grow, while EMEA is projected to be slightly behind 2025 sales due to trends in the Middle East and parts of Europe. APAC is under strategic review for scaling opportunities.
Full Year Operating Margin: Expected to remain in the range of 12% to 12.5%, with gross margin stability supported by mitigation efforts against external cost pressures, including tariffs and freight costs.
Earnings Per Share (EPS) for 2026: Projected to be in the range of $10.20 to $11, with diluted weighted average shares of around 44 million.
Capital Expenditures for 2026: Expected to be around $225 million, with plans for 130 new store experiences, including 50 new stores and 80 remodels and rightsizes. Net store openings are expected to be relatively balanced across brands but tilted to the Americas.
Share Repurchases for 2026: Targeting $450 million in share repurchases for the year.
Second Quarter 2026 Net Sales Growth: Expected to grow 2% to 4% compared to Q2 2025, driven by strength in the Americas and APAC, with ongoing pressure in parts of EMEA.
Second Quarter 2026 Operating Margin: Projected to be around 10%, including $20 million or 120 basis points of unfavorable tariff impact, net of mitigation efforts.
Second Quarter 2026 Earnings Per Share (EPS): Expected to be in the range of $1.80 to $2, with diluted weighted average shares of around 45 million.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Share Repurchases: The company returned $105 million to shareholders through share repurchases, totaling 3% of shares outstanding as of the beginning of the year.
2026 Share Repurchase Target: The company is targeting returning $450 million to shareholders via share repurchases for the year.
Q2 2026 Share Repurchase Plan: The company anticipates at least $150 million in share repurchases for the second quarter of 2026.
Remaining Share Repurchase Authorization: The company ended the quarter with $745 million remaining on its current share repurchase authorization.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:How much of an impact did the Middle East have on sales, and how is it being incorporated into future planning?
A:The Middle East impact was about 50 basis points to the total versus the outlook provided in March. The company expects a similar impact in Q2 and the full year. They are managing this by adjusting inventory, aligning promotions, and staying close to demand in the region.
Q:Is the ERP implementation complete?
A:Yes, the ERP implementation is complete. The team did an excellent job with the cutover, and it strengthens the foundation for the business, allowing for development in new channels and categories.
Q:How would you frame the consumer sentiment for Hollister and Abercrombie?
A:Both brands are strong, and growth is expected throughout the year. Consumer sentiment remains positive, with no change in performance across cohorts. Abercrombie has seen its second consecutive quarter of growth, and Hollister is strong in the Americas but more affected by EMEA challenges.
Q:What trends were observed throughout the quarter, and what is the expectation for go-forward comp performance?
A:The company had a strong Q1 with 14 consecutive quarters of growth. Q1 trends have continued, and the outlook is for 2% to 4% growth. Inventory is well-controlled, and assortments are performing well. Promotional levels were consistent with the plan, and AUR growth was observed.
Q:Has there been an elevated promotional cadence recently, and how does it affect AUR?
A:Promotional levels were consistent with the plan, and AUR growth was positive. The company remains disciplined with promotions, aligning them with inventory control and customer value perception.
Q:Is Hollister in chase mode, and are there additional costs associated with it?
A:Yes, Hollister is in chase mode. The company has a supply chain set up in 16 countries, enabling them to respond quickly. Fuel costs are affecting the back half of the year, but chase mode purchases are generally better than buying ahead without confidence.
Q:What is the update on YPB and its performance?
A:YPB has seen nice acceleration this year and is performing well.
Q:Is there a shift happening in men's fashion, particularly with dressed-up items?
A:Yes, there is a shift towards a balanced assortment that includes both casual and more dressed-up items. The company is working on this opportunity for their customers.
Q:What drives the acceleration in the full-year guidance, and how are tariffs and freight impacting EBIT margin?
A:The company expects growth across brands and regions, with headwinds from the Middle East and ERP impact offset by inventory control and AUR growth. Tariffs are a slight headwind for the full year, while freight is a slight tailwind in Q1 but will normalize and become a headwind in the back half of the year.
Q:What are the benefits of AI investments in the business?
A:AI is being integrated across the business, including customer care, forecasting, inventory, and creating seamless customer experiences. The team is undergoing AI training, and tools like Copilot Premium are being used.
Q:What is the impact of EMEA challenges on Hollister, and how is the company addressing it?
A:EMEA challenges, particularly in the Middle East, have a significant impact on Hollister. The company is managing this by adjusting inventory and promotions and staying close to demand. Growth is still expected for Hollister for the full year.
Q:What is the demand for denim, and how is it performing?
A:Demand for denim remains strong, with no changes observed. Pricing and promotions are being protected, and the category is performing well across both brands and genders.
Q:How is SG&A being managed in light of slower demand in the Middle East?
A:The company is maintaining a balanced flow-through and investing in marketing, stores, and capabilities for long-term growth. They are navigating external headwinds while supporting the business for the future.
Q:What is the status of the strategic review of Asia, and does strong growth in the region affect it?
A:The strategic review of Asia is ongoing, focusing on optimizing the go-to-market model with partnerships or capital-light approaches. Strong growth in the region reinforces the long-term opportunity.
Q:What are the key drivers of EBIT margin in Q2?
A:Key drivers include a 120 basis point impact from tariffs, slight tailwinds from freight, and investments in marketing and stores. Modest AUR growth is also expected.
Q:What happened in EMEA, and how is the company addressing it?
A:The U.K. performed well, but other parts of EMEA faced challenges, particularly in the Middle East. The company is managing inventory and promotions to align with demand and expects some improvement as comparisons ease.
Q:What is the outlook for footwear, particularly after the Sperry collaboration?
A:The Sperry collaboration was successful, and the company is exploring opportunities to expand in the footwear category.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the acceleration of EMEA performance for Hollister in Q2, stating only that the outlook for the quarter is consistent with Q1 trends. Additionally, they did not provide a clear breakdown of the impact of elevated promotional cadence on AUR growth.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI speed
AI way
APAC Middle
APAC top
APAC traffic
AURs customer
Americas APAC
Americas UK
Americas brand
Americas market
Baby Toddler
Brands date
Broadway year
Cup team
Day song
EMEA headwind
EMEA line
ERP foundation
ERP term
East country
Fran
Middle East
connection
customer relationship
expansion share
investment marketing
margin expansion
market UK
marketing store
men woman
priority
share cash
spring assortment
tariff rate
technology
ANF Transcript
Abercrombie & Fitch Co. (ANF) Q1 2026 Earnings Call Transcript
Positive5-27
The earnings call summary and Q&A session indicate a positive outlook. The company shows strong growth across brands, positive consumer sentiment, and strategic investments in AI and technology. Despite challenges in EMEA, the company manages inventory and promotions effectively. The strategic review in Asia and successful product collaborations further bolster confidence. The guidance for continued growth and disciplined financial management supports a positive sentiment, likely resulting in a stock price increase of 2% to 8% over the next two weeks.
Abercrombie & Fitch Co. (ANF) Q4 2025 Earnings Call Transcript
Positive3-4
The earnings call highlights strong financial performance, particularly in the Hollister brand and digital sales. The company is expanding its store fleet and making strategic investments in technology and partnerships. Despite challenges like tariffs and ERP disruptions, management demonstrates confidence in growth and margin improvement. Positive analyst sentiment in the Q&A reinforces these factors. Overall, the strategic initiatives and optimistic guidance suggest a likely positive stock price movement.
Abercrombie & Fitch Co. (ANF) Q3 2025 Earnings Call Transcript
Positive1-8
The earnings call summary highlights strong financial performance, strategic store expansion, and promising digital investments. The Q&A section reinforces positive sentiment with growth in key markets and effective brand collaborations. Despite some challenges, such as tariffs and inventory issues, the company is positioned for growth with sequential improvements and confident guidance. The new partnership with PayPal and SymBio, along with strong customer engagement and planned expansions, suggests a positive stock price movement.
Abercrombie & Fitch Co. (ANF) Q3 2026 Earnings Call Transcript
Positive11-25
The earnings call summary and Q&A section indicate strong financial performance, with increased sales growth expectations and a solid operating margin. Despite some challenges, such as tariffs, the company has clear strategies to mitigate impacts and enhance brand positioning. The optimistic guidance and strategic initiatives, including new store openings and marketing investments, suggest positive momentum. Collaborations and a focus on balanced growth across categories further support a positive outlook. The lack of detailed guidance on certain topics does not overshadow the overall positive sentiment, leading to a prediction of a positive stock price movement.
ANF Slides
ANF Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
