Katherine Delahunt

Katherine Delahunt, on behalf of Alexandra Straton, asked about the Abercrombie banner's timeline for returning to sales growth and comparable sales growth, given the expectation of flat sales for Q4.

Answer

CFO Robert Ball reiterated Abercrombie's sequential improvement in Q3, driven by enhanced product execution and clean inventory. He noted that marketing is resonating, the customer file is growing, and engagement is strong across channels. The goal to hold the brand flat against last year's record Q4 positions it well for growth in the next fiscal year.

Katherine Delahunt, representing Morgan Stanley, asked about the Abercrombie brand's timeline for returning to positive sales growth and comparable sales growth, given the expectation of flat sales for the fourth quarter.

Answer

CFO Robert Ball highlighted the Abercrombie brand's sequential improvement in Q3, attributing it to improved product execution, clean inventory, and effective marketing. He noted strong customer engagement and a growing customer file, with the goal of keeping the brand approximately flat in Q4 against a record prior year, which positions it well for growth in the upcoming year.

Katherine Delahunt, on behalf of Alex Straton at Morgan Stanley, asked for the specific reasons behind the increased optimism in the fourth-quarter guidance compared to three months prior, seeking details on changes by geography, banner, or financial line item.

Answer

COO Scott Lipesky explained that the increased bullishness stems from strong back-to-school performance, particularly at Hollister, and continued momentum at Abercrombie & Fitch as fall weather arrived. He noted a strong start to Q4, with customers responding well to tested holiday assortments across all brands and regions. This confidence supports the updated Q4 outlook, which implies low-double-digit growth of 11-13% after adjusting for the 53rd week and currency impacts.

Katherine Delahunt, on for Alex Straton, asked for the key factors driving the increased optimism in the raised Q4 guidance, questioning which assumptions had changed most positively by geography, brand, or financial metric.

Answer

COO Scott Lipesky explained that the increased confidence stems from strong back-to-school results, continued momentum at Abercrombie & Fitch, and a robust start to Q4. He emphasized that customers are responding well to product and marketing across all brands and regions, supporting an outlook for low double-digit growth in Q4 when adjusted for the 53rd week and currency effects.

Katherine Delahunt of Morgan Stanley, on for Alexandra Straton, questioned what assumptions for potential tariffs and the broader macroeconomic environment were embedded in the company's full-year guidance.

Answer

CEO Lisa Harper confirmed that the guidance includes only currently known tariffs and emphasized the company's flexible and diversified sourcing strategy to mitigate risks. Both Harper and CFO Paula Dempsey explained that the guidance reflects a prudent and cautious view of the consumer environment, based on recent volatility, and does not assume a significant improvement or further deterioration through the year.