Abercrombie & Fitch Co. (ANF Quick QuoteANF - Free Report) posted strong third-quarter fiscal 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Additionally, on a year-over-year basis, the company’s top line increased, but the bottom line declined.

Abercrombie’s earnings per share (EPS) of $2.36 in the fiscal third quarter declined 4.5% from $2.47 in the year-ago quarter. However, the bottom line beat the Zacks Consensus Estimate of $2.14.

Net sales of $1.291 billion advanced 7% year over year on a reported basis and 6% on a constant-currency basis. The top line surpassed the Zacks Consensus Estimate of $1.275 billion. ANF’s comparable sales (comps) improved 3%. The top-line beat was driven by broad-based net sales growth across most regions and exceptional growth at its Hollister brand.

The company recorded three years of straight quarterly sales growth, with record fiscal third-quarter net sales. Hollister brand was robust on a solid finish to back-to-school and fall seasonal transition. However, Abercrombie label made sequential progress in-line with management’s expectations. ANF is also managing inventory. The company is set to offer seamless customer experiences across brands and regions, as it enters the holiday season. Moving ahead, Abercrombie raised the lower end of its net sales and earnings outlook for fiscal 2025, citing strong momentum and continued confidence in its global brands.

Hence, ANF stock has rallied more than 25% in the trading session following its earnings release. Shares of this Zacks Rank #3 (Hold) company have gained 12.7% in the past six months against the industry's 2.3% drop.

Abercrombie’s Regional & Brand Sales Drive Growth

Sales in the Americas increased 7% year over year to $1.1 billion, EMEA sales grew 7% to $194.5 million and APAC sales dipped 6% to $38.7 million. Comps rose 4% in the Americas and 2% in EMEA while the metric was down 12% in APAC region.

Net sales fell 2% year over year to $617.3 million for the Abercrombie brand. Moreover, sales increased 16% to $673.3 million at Hollister. The Abercrombie brand contributed 47.8% to the total company sales, whereas Hollister contributed 52.2% to sales. Comps fell 7% for Abercrombie but grew 15% for Hollister in the quarter.

Our model predicted sales growth of 5.1% for the Abercrombie brand and 5.6% for Hollister. We estimated sales to increase 5.3% in the Americas, 5.1% in EMEA and 7.5% in APAC.

ANF’s Quarterly Performance: Margins & Expenses

Selling expenses were $459.5 million, which rose 9.1% year over year. As a percentage of sales, selling expenses expanded 80 basis points (bps) to 35.6%. General and administrative costs edged up 2.8% to $193.4 million, while the metric, as a percentage of sales, decreased 60 bps to 15%.

The company reported an operating income of $155 million, down 12.6% from $177.4 million in the year-ago period. It registered an operating margin of 12%, down 260 bps from the year-ago quarter, despite a 210-bps adverse tariff impact.

ANF’s Financial Health

Abercrombie ended the fiscal third quarter with cash and cash equivalents of $605.8 million and stockholders’ equity of $1.32 billion, excluding non-controlling interests.

The company had a liquidity of $1.1 billion at the end of the fiscal third quarter, which included cash and equivalents and borrowing available under the ABL Facility. Net cash provided by operating activities was $313 million as of Nov. 1, 2025.

In the third quarter of 2025, the company repurchased about 1.2 million shares for roughly $100 million. Year to date through Nov. 1, 2025, a total of 4.5 million shares were bought back for $350 million, reducing shares outstanding from the start of the year. ANF still has $950 million available under the repurchase program authorized in March 2025.

Abercrombie’s Q4 & FY25 Outlook

For the fourth quarter of fiscal 2025, net sales are projected to rise 4-6% from the $1.58 billion recorded in the year-ago period. The operating margin for the quarter is expected to be about 14%. It expects EPS to be in the band of $3.40-$3.70 compared with $3.57 reported in the year-ago quarter. The effective tax rate is expected to be about 30%. The outlook incorporates share repurchases of around $100 million and diluted weighted average shares of around 47 million.

For fiscal 2025, the company expects year-over-year sales growth in the range of 6-7% compared with 5-7% growth expected earlier. This upside is likely to be backed by growth across regions and brands. ANF continues to anticipate an operating margin in the band of 13-13.5%. Abercrombie estimates tariff cost impacts, net of planned mitigation actions, of $90 million or 170 bps as a percent of net sales for the fiscal year.

For fiscal 2025, management envisions weighted average shares of around $48 million, which reflects the impacts of 2025 share repurchases of $450 million. Combined with the tax rate, ANF predicts EPS to be in the bracket of $10.20-$10.50 compared with the $10-$10.50 guided earlier.

Abercrombie anticipates an effective tax rate of around 30% for fiscal 2025. Capital expenditure is estimated to be $225 million for the current fiscal year.

For fiscal 2025, Abercrombie plans 60 store openings, together with 40 remodels and rightsizes, and 20 closures.

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