Abercrombie & Fitch (NYSE:ANF) executives said the retailer ended fiscal 2025 with results at the high end of the company’s early January update, citing broad-based holiday demand, disciplined inventory management, and continued profitability despite a meaningful tariff headwind. Management also outlined a fiscal 2026 outlook that assumes additional tariffs remain in effect throughout the year and flagged a strategic review of its Asia-Pacific business to improve returns.
Fourth-quarter results: record sales and continued profitability
For the fourth quarter of fiscal 2025, Abercrombie & Fitch reported net sales of $1.67 billion, up 5% year over year. Comparable sales rose 1%, including roughly 100 basis points of benefit from foreign currency. By region, net sales increased 5% in the Americas, 8% in EMEA, and 9% in APAC, while comparable sales were up 2% in the Americas, down 3% in EMEA, and approximately flat in APAC.
On profitability, the company posted an operating margin of 14.1% and operating income of $236 million, compared with $256 million a year earlier. CFO Robert Ball said the year-over-year operating margin decline of 210 basis points was “driven primarily” by 360 basis points of tariff expense, partially offset by 140 basis points of freight cost favorability. Adjusted EBITDA margin was 16.6% on adjusted EBITDA of $276 million.
Earnings per diluted share were $3.68, above the company’s outlook and up from $3.57 last year. The tax rate for the quarter was 28%.
Fiscal 2025: $5.27 billion in sales and strong cash generation
For the full year on an adjusted non-GAAP basis, the company reported record net sales of $5.27 billion, up 6% year over year. Horowitz said fiscal 2025 net sales surpassed $5 billion for the first time in company history, while operating margins remained in the double digits for the third straight year.
Ball said comparable sales for the year increased 3%, led by a 4% gain in the Americas, with EMEA approximately flat and a 3% decline in APAC. He added that foreign currency provided a favorable 70 basis point benefit to net sales for the year.
Brand performance diverged in 2025. Hollister Brands delivered net sales growth of 15% and comparable sales growth of 13%. Abercrombie Brands posted a 1% net sales decline and a 7% comparable sales decline, though Ball said store openings and third-party channel volume created a “6-point favorable spread” between reported net sales and comparable sales.
Operating income for the year was $661 million, which Ball said was an $80 million decline from fiscal 2024’s record result, driven by approximately $90 million in tariff expense included in cost of sales. Operating margin was 12.5% for the year, down 250 basis points from 2024. Adjusted EBITDA margin was 15.5% on adjusted EBITDA of $816 million, compared with $895 million last year.
The company ended the year with $760 million in cash and cash equivalents and about $1.2 billion in liquidity, plus $25 million in current investments. Operating cash flow was $619 million and free cash flow was $378 million. Abercrombie & Fitch repurchased $450 million of shares, totaling 5.4 million shares, or 11% of shares outstanding at the beginning of the year.
Stores, digital, and inventory: omnichannel growth and “read and react”
Executives emphasized ongoing growth across stores and digital. Digital accounted for 44% of total sales for the year, with Hollister around 31% and Abercrombie around 59%, according to Ball. Horowitz said the company surpassed 1 billion visits across its platforms for the first time.
On the store base, Ball said the retailer delivered 120 “new store experiences,” including 62 new stores, 11 right-sizes, and 47 remodels. The company closed 22 stores and ended the year with 829 stores (523 Hollister and 306 A&F), expanding square footage by 4%. Ball said four-wall store operating margins were around 30% in aggregate.
Inventory remained a key focus. The company ended the quarter with inventory at cost up 5%, including about 3 points related to tariffs. Inventory units were also up 5%, with about 3 points tied to building receipts ahead of a planned merchandising ERP implementation. Ball said that excluding the ERP-related build, units were up about 2%, and management described both brands as being in a “chase position.”
Fiscal 2026 outlook: growth, tariffs, and an APAC strategic review
For fiscal 2026, the company guided for net sales growth of 3% to 5% from fiscal 2025’s $5.27 billion, with growth expected across brands. Management projected a 40 basis point favorable impact from foreign currency. The company expects modest AUR improvement for the year, supported by “revised ticket pricing” largely focused on fashion elements, while noting it did not raise prices in key categories such as denim and opening-price-point T-shirts.
Abercrombie & Fitch guided for operating margin of 12% to 12.5% for 2026. At the midpoint, Ball said the year-over-year change reflects about 70 basis points of incremental tariff expense, or roughly $40 million, net of product mitigation. The outlook assumes 15% global tariffs announced by the administration were effective beginning February 24 and remain in effect through the end of the fiscal year, and it assumes no tariff refunds or recoveries in fiscal 2026.
Management also described how tariff impacts could change across the year, with Ball saying tariff headwinds are expected to be fully incremental in the first quarter, begin to be lapped in the back end of the second quarter, “neutraliz[e] in Q3,” and become “a bit of a tailwind” in the fourth quarter.
In APAC, Ball said the company is reviewing strategic alternatives, including partnerships, franchising, and licensing, after concluding that returns have not “fully reflected the level of investment.” Executives characterized the process as early-stage and said they would provide updates “as appropriate.”
For capital allocation, the company expects capital expenditures of $200 million to $225 million and targets share repurchases of about $450 million in 2026. On stores, it expects about 125 new experiences, including 55 new stores and 70 right-sizes or remodels, and anticipates being a net store opener (55 openings versus about 25 closures), with openings “tilted to the Americas.”
First-quarter 2026 guide: ERP transition and near-term headwinds
For the first quarter of fiscal 2026, the company projected net sales growth of 1% to 3% from the prior-year level of $1.1 billion and operating margin of about 7%. Management said a new merchandising ERP go-live would temporarily impact operations for about two weeks, limiting inventory receipts and movement, and creating a 1 to 2 percentage point headwind to quarterly growth along with more than 100 basis points of unfavorable operating margin impact, including implementation costs.
The company also expects tariffs to pressure first-quarter results, with Ball forecasting about 290 basis points of operating margin decline (about $30 million) net of product mitigation, partially offset by a freight tailwind of roughly 160 basis points. Marketing investment is expected to be up about 50 basis points as a percentage of sales in the quarter, with marketing for the full year expected to be roughly flat year over year as a percentage of sales.
First-quarter earnings per share are expected to be $1.20 to $1.30, with a tax rate of about 26% and diluted weighted average shares around 46 million, including at least $100 million of anticipated share repurchases. Executives said they were monitoring the Middle East conflict, anticipating a “slight sales headwind” while prioritizing safety, and noted they had not experienced sourcing disruptions that would meaningfully impact receipt plans.
About Abercrombie & Fitch (NYSE:ANF)
Abercrombie & Fitch Co (NYSE: ANF) is an American specialty retailer that designs, markets and sells casual apparel and accessories for men, women and children. Founded in 1892 by David T. Abercrombie and Ezra Fitch, the company evolved from an outdoor gear outfitter to a global lifestyle brand renowned for its relaxed, preppy aesthetic. Its product assortment includes tops, bottoms, outerwear, intimates, swimwear, fragrances and personal care items.
The company operates under multiple brand names, including Abercrombie & Fitch, Abercrombie Kids, Hollister and Gilly Hicks, each targeting distinct consumer segments from teens to young adults.
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