Abercrombie & Fitch Co. has updated its outlook for fiscal year 2025, signaling a slightly more cautious stance on sales growth amid pressure from rising tariff-related costs. Despite posting record-breaking net sales through December, the retailer reduced its full-year sales growth guidance, now anticipating a minimum increase of 6% compared to the previous forecast of 6% to 7%. This adjustment contributed to a significant drop in its stock price.
Management continues to project an overall operating margin near 13% for the year, while the fourth quarter is expected to deliver revenue growth of approximately 5% alongside an operating margin close to 14%. In terms of profitability, full-year diluted earnings per share (EPS) guidance ranges from $10.30 to $10.40, with fourth-quarter EPS anticipated between $3.50 and $3.60. These figures demonstrate confidence in underlying consumer demand despite tough year-over-year comparisons.
The decision to tighten sales forecasts follows a robust third quarter that surpassed market expectations, propelled by strong performance in the Americas and Europe, Middle East, and Africa (EMEA) regions. During that period, Abercrombie reported adjusted EPS of $2.36 on revenues amounting to $1.29 billion. Encouraged by these results, management had previously raised their fiscal 2025 sales growth target from a range of 5% to 7% up to 6% to 7%.
The company's capital allocation strategy remains focused on shareholder returns and operational enhancements. Abercrombie reaffirmed plans to repurchase approximately $450 million in shares over the upcoming fiscal year, including about $100 million earmarked for the fourth quarter. The retailer also announced an increase in expected capital expenditures to roughly $245 million, intended to support ongoing investments in digital platforms, marketing campaigns, and store operations improvements.
Embedded within the updated full-year outlook is an estimated $90 million cost related to tariffs after mitigation efforts, which equates to roughly 170 basis points of net sales. This tariff pressure represents a notable headwind impacting the company’s profitability and sales expansion potential.
Chief Executive Officer Fran Horowitz highlighted that the Hollister brand is projected to achieve mid-teens net sales growth during fiscal 2025. Conversely, the Abercrombie core brand is forecasted to realize low single-digit sales increases in the fourth quarter, which will be compared to a strong performance in the previous year, making growth more challenging.
Abercrombie & Fitch is scheduled to engage further with investors and industry analysts during the ICR Conference on January 12-13, 2026, where it plans to elaborate on its outlook and articulate long-term strategic initiatives.
Following the sales guidance revision and the impact of tariffs, the company’s share price declined sharply, with shares falling approximately 16.5% to a trading price near $104.23 at the time of reporting.