Abercrombie & Fitch Reports Increased Profit Amid Market Slip

Abercrombie & Fitch Co. sees a net profit increase, but EPS disappoints. Stock slips 9.22% to $87.25 in pre-market. Investors weigh mixed outcomes.

Date: 05-03-2025

AI Rating: 5

Mixed Results for Abercrombie & Fitch
Abercrombie & Fitch Co. has reported a significant net income increase for the fourth quarter, achieving $187.23 million or $3.57 per share, up from $158.45 million or $2.97 per share in the previous year. This positive trend can be attributed to 'improved operating margins' and a notable revenue growth of 9%, as net sales reached $1.58 billion.

However, despite these positive figures, the adjusted earnings per share (EPS) of $3.57 fell short of analysts' expectations of $3.60 per share, potentially raising concerns about the company’s future earnings performance. This mixed result has led to a 9.22% decline in pre-market activity, with shares trading at $87.25, indicating investor hesitation.

Revenue Growth and Operating Margins
The reported revenue growth of 9% reflects a strong sales performance both on a nominal and constant currency basis. Abercrombie’s comparable sales growth of 14% further emphasizes its ability to attract consumers despite a challenging retail environment. Additionally, the improvement in operating margin to 16.2%, up from 15.3% year-over-year, signals effective cost management and enhanced profitability.

Looking ahead, Abercrombie has provided a cautious outlook for the first quarter, expecting earnings between $1.25 and $1.45 per share, with projected net sales growth of 4% to 6%. This outlook is conservative when compared to analysts’ estimates of $2.01 in earnings per share. For fiscal year 2025, the company estimates earnings between $10.40 and $11.40 per share on net sales growth of 3% to 5%—again, below the expectations of $11.30 per share from analysts.

Stock Repurchase Program
On a positive note, the company’s Board of Directors has authorized a new $1.3 billion stock repurchase program, replacing a previous one from 2021. This demonstrates confidence in the company’s cash flow and its commitment to return value to shareholders, with an expected $400 million allocated for share repurchases in 2025.

Stocks: ANF