Sign in
A&

ABERCROMBIE & FITCH CO /DE/ (ANF)·Q3 2025 Earnings Summary

Executive Summary

  • Record quarterly net sales of $1.209B (+14% y/y) and operating income of $179M with operating margin expanding 170 bps to 14.8%; diluted EPS was $2.50, up from $1.83 y/y .
  • Broad-based growth: Americas +14% y/y, EMEA +15%, APAC +32%; Abercrombie brands +15% and Hollister brands +14% with comps +16% overall .
  • Guidance raised: FY 2024 net sales growth to 14–15% (from 12–13%) and operating margin “around 15%”; Q4 outlook calls for +5–7% reported sales, ~16% operating margin, with calendar and FX headwinds explicitly quantified .
  • Catalyst: Management highlighted continued AUR strength on lower promotions, proactive inventory positioning (including air freight) amid shipping volatility, and accelerating store investments; new CFO Robert Ball appointed, reinforcing financial discipline narrative .

What Went Well and What Went Wrong

What Went Well

  • “For the sixth consecutive quarter, our global team delivered double-digit net sales growth,” with third-quarter operating income up 30% and gross profit rate at 65.1%, the best Q3 since 2010 .
  • Both brands set Q3 net sales records; Abercrombie +15% y/y (11% comps) and Hollister +14% y/y (21% comps), driven by strong traffic across stores and digital and lower promotions lifting AUR .
  • Regional execution consistent: Americas +14%, EMEA +15% (UK/Germany leading), APAC +32% (China strength), with localized playbooks and elevated marketing driving results .

What Went Wrong

  • Freight costs a headwind: higher ocean/air rates and increased air usage to mitigate transit delays and port strike pressures offset AUR gains; management expects elevated freight to persist into Q4 .
  • Inventory up 16% y/y to $693M, partly from freight cost and earlier receipts; while “clean,” sequential lift reflects proactive shipping amid volatility (optically negative) .
  • Q4 gross margin expected roughly flat y/y as freight and FX offset lower promotions; limits upside to margin expansion near term despite sales momentum .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$1,020.730 $1,133.974 $1,208.966
Diluted EPS ($USD)$2.14 $2.50 $2.50
Gross Profit Margin %66.4% 64.9% 65.1%
Operating Income ($USD Millions)$129.849 $175.625 $179.282
Operating Margin %12.7% 15.5% 14.8%
EBITDA ($USD Millions)$168 $215 $218.848
Comparable Sales %21% 18% 16%
Gross Profit ($USD Millions)$677.457 $736.262 $786.932
Segment/Brand Net Sales ($USD Millions)Q3 2024 (Prior Year)Q2 2025 (Prior Qtr)Q3 2025 (Current)
Americas$867.566 $901 $986.449
EMEA$157.976 $200 $181.592
APAC$30.889 $33 $40.925
Abercrombie brands$547.728 $582 $629.835
Hollister brands$508.703 $552 $579.131
KPIsQ1 2025Q2 2025Q3 2025
Cash & Equivalents ($USD Millions)$864 $738 $683.089
Liquidity ($USD Billions)~$1.2 ~$1.2 ~$1.1
Inventories ($USD Millions)$449 $540 $693
Store Count (Total)753 757 773
Store Count by Brand (Q3 only)——Abercrombie+kids 247; Hollister+Gilly 518
YTD Share Repurchases——924,205 shares; $130M
Comparable Sales % (Constant Currency)Q1 2025Q2 2025Q3 2025
Total Company21% 18% 16%
Americas21% 18% 16%
EMEA23% 17% 13%
APAC22% 21% 16%
Abercrombie brands29% 21% 11%
Hollister brands13% 15% 21%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales GrowthFY 202412–13% 14–15% Raised
Operating MarginFY 202414–15% Around 15% Tilted to high end (maintained range)
Effective Tax RateFY 2024Mid-20s Mid-20s Maintained
Capital ExpendituresFY 2024~$170M ~$170M Maintained
Real Estate ActivityFY 2024~20 net openings; 60 openings/40 closures; 60 remodels/right-sizes Same Maintained
Net Sales GrowthQ4 2024N/A+5–7% (reported); +11–13% ex calendar & FX headwinds New/Updated
Operating MarginQ4 2024N/AAround 16% New/Updated
Effective Tax RateQ4 2024N/AHigh-20s New/Updated

Earnings Call Themes & Trends

TopicQ1 2025 (Prior-2)Q2 2025 (Prior-1)Q3 2025 (Current)Trend
Supply chain & freightCotton tailwind and slight freight benefit; lean inventory, reduced clearance Freight turns headwind; higher ocean/air rates; inventories up 9% y/y Elevated freight; proactive air to offset transit delays/port strike; inventories up 16% y/y but “clean” Freight headwind worsening
Digital/technology investmentsIncreased marketing, digital, tech investments; omnichannel focus Continued investments; improved digital experience; comps double-digit Marketing ramp to ~5.5% of sales in Q3; continued digital investments Sustained/increasing
Product performanceLaunch of The Wedding Shop; balanced category growth; AUR up Wedding Shop momentum; NFL expansion; Hollister acceleration Key categories: sweaters/dresses/jeans/fleece; Hollister Collegiate Graphic Shop Expanding concepts succeeding
Regional trendsAmericas +23%; EMEA +19% (UK/Germany); APAC +10% (China) Americas +23%; EMEA +16%; APAC +3% net (comps +21%) Americas +14%; EMEA +15%; APAC +32% Broad-based strength
Tariffs/macro—Monitoring freight; macro uncertainty Low China import exposure (5–6% of US receipts), diversified sourcing (17 countries), Mexico/Canada immaterial Managed risk; low exposure
Store growthPlan: ~60 new stores, 65 remodels/right-sizes 757 stores; strong new/remodel returns 773 stores; brand split 247/518; targets maintained Increasing net openings

Management Commentary

  • “For the sixth consecutive quarter, our global team delivered double-digit net sales growth… The strong top-line growth drove third quarter operating income of $179 million, up 30% to 2023.” — Fran Horowitz, CEO .
  • “We delivered $787 million in gross profit… with higher AURs from lower promotions, mostly offset by higher freight costs due to higher freight rates and air usage.” — Scott Lipesky, COO .
  • “We are increasing our full year sales outlook and now expect growth in the range of 14% to 15%, with an operating margin of around 15%.” — Scott Lipesky .
  • “Our Hollister customers tend to start their journey digitally, but they still finish a majority of their transactions in stores.” — Fran Horowitz .

Q&A Highlights

  • Hollister acceleration and margin: Balanced growth across genders/categories; collegiate collection helping; Hollister margins and store productivity “very strong” .
  • Sustainability of margins: Platform viewed as sustainable across P&L; gross margin supported by agile inventory; freight called out as transient headwind; flow-through strong .
  • Inventory and freight: Inventory up to position for holiday amid shipping volatility; proactive air freight; Q4 gross margin roughly flat y/y given freight/FX .
  • AUR/promotion: Lower promotions and product acceptance enabling AUR gains; aim to continue modest promotion pullbacks in Q4 .
  • Tariffs exposure: China imports into US ~5–6%; diversified sourcing across 17 countries; minimal Mexico/Canada exposure; flexible playbook if policy changes .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2025 EPS and revenue was not retrievable at time of request due to SPGI daily limit; thus explicit beat/miss vs consensus cannot be stated. Values were unavailable from S&P Global at the time of this analysis.
  • Management indicated results exceeded expectations provided in August, with top- and bottom-line outperformance and guidance raised for FY 2024, implying estimates may need upward revisions for Q4 and FY given stronger sales and operating margin trajectory .

Key Takeaways for Investors

  • Demand remains robust across brands/regions with pricing power: comps +16% and AUR up on lower promotions; gross margin elevated despite freight headwinds — supports medium-term margin sustainability .
  • Freight/FX are the near-term swing factors: expect gross margin roughly flat in Q4; watch commentary on shipping lanes and air freight usage for potential upside if rates ease .
  • Operating leverage intact: OpEx as % of sales improved y/y to 50.4%; marketing spend rising to ~5.5% to fuel growth while maintaining discipline — constructive for continued EBIT margin expansion into FY 2025 if freight moderates .
  • Hollister inflection strengthens the multi-brand story: 21% comps and strong store productivity indicate sustained recovery, reducing reliance on Abercrombie brand and broadening the growth base .
  • Inventory is a tactical positive despite y/y increase: earlier receipts mitigate supply chain risks; management asserts positions are “clean,” reducing clearance risk and sustaining AUR .
  • Capital allocation supportive: debt fully redeemed in Q2; ~$102M remaining buyback authorization; YTD repurchases of $130M — expect continued buybacks subject to performance and valuation .
  • FY 2024 guide raised; Q4 outlook implies low double-digit underlying growth ex calendar/FX: positions ANF for continued narrative of sustainable profitable growth into 2025, with store investments as an incremental growth lever .