Key Takeaways
- Fourth quarter adjusted EPS reached $3.68, surpassing Wall Street’s $3.57 projection
- Revenue totaled $1.67 billion, meeting forecasts; comp sales increased 1%
- Shares declined 2.3% in Wednesday’s premarket session following the earnings release
- Year-to-date through Tuesday, the stock has shed 21% in 2026
- Management projects 2026 net sales expansion of 3%–5%, trailing 2025’s 6% performance
Abercrombie & Fitch exceeded fourth quarter profit expectations but underwhelmed investors with its conservative 2026 sales outlook and disclosed a 70 basis point tariff impact, triggering a selloff.
The apparel retailer delivered adjusted profit of $3.68 per share in its fiscal fourth quarter, beating the Street’s consensus estimate of $3.57, based on FactSet data.
Revenue landed at $1.67 billion, matching analyst projections. Year-over-year comparable-store sales growth registered at 1%.
Even with the earnings outperformance, shares fell 2.3% in premarket action Wednesday morning. The negative market response wasn’t entirely unexpected — the stock had already tumbled 21% year-to-date through Tuesday’s close, pressured by a reduced Q4 outlook issued in January.
The primary concern for shareholders centers on forward momentum.
Forward Guidance Signals Growth Deceleration
For the current fiscal year 2026, management projects net sales growth ranging from 3% to 5%. This represents a notable slowdown compared to the 6% expansion achieved in 2025, though it aligns closely with analyst expectations calling for 4.2% growth.
Adjusted net income per share for the full year is anticipated to land between $10.20 and $11. The midpoint of approximately $10.60 exceeds the analyst consensus of $10.36, according to LSEG data.
While the profit outlook appears solid, it’s the decelerating revenue trajectory that’s pressuring shares.
Import Duties Add to Challenges
The company highlighted tariff exposure as a factor embedded in its 2026 projections. Abercrombie maintains significant sourcing operations in Vietnam, Indonesia, and Cambodia — nations that faced heightened U.S. import tariffs before the Supreme Court invalidated Trump’s expansive IEEPA duties.
Following the elimination of those emergency measures, the United States is currently enforcing a temporary 10% universal import tariff, with administration officials indicating a potential increase to 15%.
Management indicated it has incorporated a 70 basis point tariff-related impact into its full-year guidance.
The company clarified that its projections don’t factor in any possible refunds or recoveries connected to the invalidated tariffs — suggesting potential upside if those materialize, though management isn’t banking on it.
While the 70 basis point headwind is relatively modest, it represents an additional challenge alongside the moderating revenue growth.
Abercrombie emphasized that its guidance reflects the existing tariff landscape, without making assumptions about future policy shifts.
The stock’s 21% year-to-date decline preceding Wednesday’s announcement reflects mounting investor skepticism that the retailer’s recent growth trajectory can be sustained.
The fourth quarter adjusted EPS of $3.68 exceeded projections by $0.11, and the full-year EPS midpoint surpasses consensus estimates — but these positives couldn’t overcome concerns about the more conservative sales growth outlook.
