Executive Summary

Q4 2025 delivered record quarterly sales and EPS: revenue $1.585B (+9% reported; +10% cc), comps +14%, operating margin 16.2% (+90 bps YoY), diluted EPS $3.57 (+20% YoY) .
Hollister led growth (sales +16%, comps +24%) with Abercrombie up modestly (+2% sales, +5% comps), aided by strong traffic and lower promotions offset by higher freight; gross margin 61.5% vs 62.9% last year due to freight and air usage .
FY25 outlook: net sales +3–5%, operating margin 14–15% (vs 15% in 2024), EPS $10.40–$11.40; Q1 FY25 guide: sales +4–6%, operating margin 8–9%, EPS $1.25–$1.45; new $1.3B buyback with ~$100M per quarter targeted in 2025 (subject to conditions) .
Strategic/catalyst setup: 7th straight quarter of double‑digit comps, inventory positioned for spring (units +6% YoY; total inventory +22% on freight/carryover/mix), and capital returns under the expanded authorization; freight pressures expected to abate in 2H25, turning into a tailwind .

What Went Well and What Went Wrong

What Went Well
- Broad-based demand: Q4 comps +14% with double‑digit comp growth across regions; Americas comps +15%, EMEA +12%, APAC +17% .
- Hollister outperformance: Q4 sales +16% and comps +24%, driven by strong category acceptance (e.g., jeans, fleece) and traffic; record Q4 brand sales .
- Expense leverage and margin: Operating margin expanded to 16.2% (+90 bps YoY) on SG&A leverage despite lower gross margin; EPS +20% YoY to $3.57 .
- Management quote: “We finished the fourth quarter ahead of the range…based on great holiday performance…delivered top‑tier financial results…operating margin and EPS expansion” .
What Went Wrong
- Gross margin compression: Q4 gross margin fell to 61.5% (from 62.9%) due to higher freight rates and increased air usage to protect delivery times .
- APAC reported sales declined: Q4 APAC sales –4% YoY (though APAC comps were +17%); headwinds from store closures, FX, and prior year 53rd week mix .
- Early‑quarter brand divergence: February trends were mixed—Hollister “very strong,” Abercrombie “a bit negative” as spring transition normalized vs last year’s “flawless” transition; management is “chasing” into green shoots (dresses, skirts, swim) .

Financial Results

Headline metrics (GAAP)

Metric	Q2 2025	Q3 2025	Q4 2025
Revenue ($B)	$1.209	$1.209	$1.585
Operating Margin (%)	17.1 (13.9 adj; litigation benefit)	14.8	16.2
Diluted EPS ($)	$2.91 (adj $2.32)	$2.50	$3.57

Year-over-year Q4 bridge and other details

Item	Q4 2024 (FY)	Q4 2025
Revenue ($B)	$1.453	$1.585 (+9% rpt; +10% cc)
Gross Margin (%)	62.9	61.5 (–140 bps YoY on freight/air)
Operating Income ($M)	$222.8	$256.1 (+15% YoY)
Operating Margin (%)	15.3	16.2 (+90 bps YoY)
Diluted EPS ($)	$2.97	$3.57 (+20% YoY)
53rd week headwind	N/A	~$80M (~550 bps)

Brand and geography

Segment	Q2 2025 ($M)	Q3 2025 ($M)	Q4 2025 ($M)
Abercrombie Brands	551.9	630	772.7
Hollister Brands	656.7	579	812.2
Americas	974.2	986	1,319.7
EMEA	197.2	182	224.5
APAC	37.2	41	40.7

KPIs and balance sheet (Q4 unless noted)

KPI	Value
Comparable Sales (Total)	+14%
Comps by Region	Americas +15%; EMEA +12%; APAC +17%
Marketing Expense	~7% of sales in Q4 (+50 bps YoY)
Inventory at Cost	$575M (+22% YoY); units +6% (rest due to freight, seasonal carryover, category mix)
Cash & Equivalents	$773M; Liquidity ~$1.2B
FY2024 Free Cash Flow	$527M
FY2024 Digital Mix	46% of sales (A&F ~60%, Hollister ~30%)

Notes: Q2 FY25 includes a favorable litigation settlement ($39M pre‑tax; EPS +$0.59), with adjusted operating margin 13.9% and adjusted EPS $2.32 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales Growth	Q1 FY25	Initial	+4% to +6%	Initial issuance
Operating Margin	Q1 FY25	Initial	8% to 9%	Initial issuance
EPS (diluted)	Q1 FY25	Initial	$1.25 to $1.45	Initial issuance
Tax Rate	Q1 FY25	Initial	~25%	Initial issuance
Diluted Avg Shares	Q1 FY25	Initial	~52M	Initial issuance
Share Repurchases	Q1 FY25	Initial	~$100M	Initial issuance
Net Sales Growth	FY25	Initial	+3% to +5%	Initial issuance
Operating Margin	FY25	Initial	14% to 15%	Initial issuance
EPS (diluted)	FY25	Initial	$10.40 to $11.40	Initial issuance
Tax Rate	FY25	Initial	~26%	Initial issuance
Diluted Avg Shares	FY25	Initial	~51M	Initial issuance
Share Repurchases	FY25	Initial	~$400M	Initial issuance
Capex	FY25	Initial	~$200M	Initial issuance
Real Estate Activity	FY25	Initial	~40 net openings; 60 openings/20 closures; 40 remodels/rightsizes	Initial issuance

Management also authorized a new $1.3B repurchase program replacing the 2021 plan; targeting roughly $100M per quarter in 2025, subject to performance, share price, and market conditions .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 FY25)	Previous Mentions (Q3 FY25)	Current Period (Q4 FY25)	Trend
Freight & Supply Chain	Higher freight; Q2 GM benefited by mix; no detailed 2H view	Proactive air to mitigate longer transit and port strike; freight a headwind; inventory up partly due to freight	Gross margin down on higher freight/air; freight headwind in 1H25 expected to flip to tailwind in 2H25	Improving into 2H25
Tariffs/Macro	FY25 outlook later included tariff assumptions (subsequent quarter)	Discussed low US China exposure 5–6% of receipts; diversified sourcing in 17 countries	FY25 outlook includes existing US tariffs (China/Mexico/Canada) with ~$5M impact; excludes further policy changes	Manageable headwind
Pricing/AUR & Promotions	Q2: leveraged promos to move inventory; A&F –5% sales vs tough lap	Lower promos; AUR up; GM ~flat YoY in Q3 despite freight	Both brands pulled back promotions in Q4; AUR up low single digits; January promos elevated to clear carryover	Disciplined; stable AUR
Inventory	Up to support growth; mix & freight factors	Up 16%; half units/mix, half freight; proactive receipts	+22% YoY; units +6%; remainder freight, seasonal carryover, category mix (dresses/licensed)	Positioned for spring
Brand Momentum	Hollister +19% (Q2); A&F –5% (lap)	Both brands double‑digit growth; record Q3; A&F +15%, Hollister +14%	Hollister +16% sales, A&F +2% sales in Q4; early Q1: Hollister strong, A&F “a bit negative” in Feb	Hollister leading
International	Strong APAC/EMEA growth in Q2	EMEA +15%, APAC +32% Q3; localized playbooks	Q4 comps double‑digit in EMEA/APAC; reported APAC sales –4% on closures/FX/53rd week; EMEA/UK/Germany strong	Healthy
Capital Allocation	Ongoing buybacks; debt redeemed in 1H25	Buybacks prioritized; $102M authorization left (pre‑new plan)	New $1.3B authorization; plan ~$100M per quarter repurchases in 2025	More return
Store Growth	~60 openings planned in FY24/25 cadence	Net store opener; strong returns (4‑wall ~20%+)	FY25 plan: ~100 new experiences (60 openings), ~40 remodels/rightsizes; net store opener	Accelerating

Management Commentary

CEO (prepared remarks): “We finished the fourth quarter ahead of the range…The fourth quarter put an exclamation point on a year of significant achievement…High‑quality sales growth resulted in meaningful operating margin and EPS expansion” .
CFO (prepared remarks): “Net sales of $1.58 billion, up 9%…Comparable sales up 14%…Operating margin was 16.2%…Gross margin 61.5%, compared to 62.9% last year as improved AURs…were more than offset by higher freight costs…Marketing expenses were around 7% of sales, up 50 bps” .
CFO (capital returns): “We announced a new $1.3 billion share repurchase authorization…targeting around $100 million in share repurchases per quarter in 2025, subject to…conditions” .
CEO (brand/regions): “Americas remains our lead region…we also saw growth of 12% in EMEA and 9% in APAC [full‑year]…successfully tested multiple brand reintroduction efforts in the UK…and increased brand engagement in Germany” .

Q&A Highlights

Near‑term cadence: Q1 FY25 sales +4–6% with operating margin 8–9%; February mixed—Hollister very strong, A&F “a bit negative,” but seeing “green shoots” in dresses/skirts/swim; pricing architecture unchanged .
Freight and margin bridge: 1H25 headwind from higher unit freight costs and carryover inventory sell‑through; freight expected to become a tailwind in 2H25; marketing deleverage in Q1 as they fund “full funnel” campaigns .
Inventory strategy: +22% YoY at cost; units +6% to support Q1 growth; remainder freight, normalized seasonal carryover, category mix (dresses/licensed) .
Stores: ~100 new experiences in FY25 (60 openings, ~20 closures), leaning slightly to EMEA and A&F; four‑wall store margin “around 30%” (aggregate fleet) .
Sourcing/tariffs: Diversified (17 countries); US‑import exposure from China is limited; FY25 outlook includes existing US tariffs on China/Mexico/Canada (~$5M impact) .

Estimates Context

S&P Global (Capital IQ) consensus estimates for Q4 FY25 and prior quarters could not be retrieved at this time due to provider rate limits. As a result, we cannot show “vs. Street” comparisons in this report; we will refresh and provide a beat/miss analysis upon access restoration. SPGI errors: “Daily Request Limit…Exceeded.” [Values from S&P Global were unavailable at time of request].

Key Takeaways for Investors

Quality of growth remains high: Q4 delivered double‑digit comps (+14%) and margin expansion to 16.2% despite freight headwinds; Hollister is the growth engine while A&F transitions into spring with “green shoots” in dresses/skirts/swim .
Freight/mix headwinds should abate: Management expects a front‑half gross margin drag (freight/carryover) to flip to a tailwind in 2H25, supporting full‑year 14–15% operating margin guidance (vs 15% in 2024) .
Capital returns accelerate: New $1.3B buyback with ~$100M per quarter targeted in 2025, alongside a debt‑free balance sheet and ~$1.2B liquidity—supportive for EPS and downside protection .
FY25 setup: Sales +3–5% with continued store expansion (~40 net openings) and tech/digital investments; Q1 guide embeds higher marketing and carryover clearance—monitor gross margin inflection into 2H .
Hollister strength is structural: Category breadth (jeans, fleece, collegiate), lower promo mix, and strong traffic suggest sustained share gains in teen; track whether A&F reaccelerates as spring/summer sets turn on .
Watch tariffs and FX: FY25 includes ~$5M tariff impact and assumes current policies only; FX was a modest headwind to Q4 reported sales .

ABERCROMBIE & FITCH CO /DE/ (ANF)·Q4 2025 Earnings Summary