Abercrombie ( ANF ) down 9% since the last financial report: Is a Rebound possible?

It has been about a month since the publication of Abercrombie & Fitch’s last financial report ( ANF ). During this period, the stock has lost nearly 9%, underperforming the S&P 500 index.

Will this recent negative trend continue until the next earnings release, or is Abercrombie about to rebound? Before examining recent investor and analyst reactions, let’s take a quick look at its latest financial report to better understand the key factors.

Abercrombie’s Second Quarter Results Surpass Expectations, Hollister Brand Up 19%

Abercrombie released its fiscal Q2 2025 results, with revenue and profits exceeding Zacks consensus estimates. Compared to the previous year, the company’s revenue increased, but net income declined.

Abercrombie’s earnings per share ( EPS ) for the second fiscal quarter stood at $2.32, down 7.2% from $2.50 recorded last year. Nonetheless, this result beat the Zacks consensus estimate of $2.27.

Net revenue of $1.21 billion grew 7% year-over-year in reported data and 6% at constant currency. This figure exceeded the Zacks consensus estimate of $1.19 billion. Comparable sales for ANF increased by 3%. This performance is explained by broad revenue growth across all regions and exceptional growth of its Hollister brand.

Abercrombie & Fitch recorded a new quarterly record, marking its eleventh consecutive period of growth. The performance was driven by Hollister, which achieved its best second quarter ever, reflecting strong demand for back-to-school and summer. Abercrombie brands experienced a slight decline compared to last year’s exceptionally strong growth. The company improved its profitability, supported by disciplined inventory management and strategic promotions, while returning capital to shareholders through ongoing share repurchases. Looking ahead, Abercrombie raised its full-year outlook, citing strong momentum and continued confidence in its global brands.

Regional and Brand Sales Drive Abercrombie’s Growth

Sales in the Americas increased by 8% year-over-year to $974.2 million, sales in EMEA declined by 1% to $197.2 million, and sales in APAC rose by 12% to $37.1 million. Comparable sales increased by 5% in the Americas, decreased by 5% in EMEA, and grew by 1% in APAC regions.

Net revenue of the Abercrombie brand decreased by 5% year-over-year to $551.9 million. Conversely, sales increased by 19% to $656.7 million for Hollister. The Abercrombie brand contributed 45.7% to the company’s total revenue, while Hollister contributed 54.3%. Comparable sales declined by 11% for Abercrombie and increased by 19% for Hollister during the quarter.

Quarterly Performance of ANF: Margins and Expenses

Abercrombie’s gross margin of 62.6% in the second fiscal quarter contracted by 230 basis points year-over-year.

Selling expenses totaled $375.4 million, down 1.9% year-over-year. As a percentage of revenue, selling expenses contracted by 260 basis points to 31.1%. General and administrative expenses decreased by 1.6% to $175.3 million, and this line item, as a percentage of revenue, declined by 120 basis points to 14.5%.

The company reported an operating income of $206.7 million, up 17.7% from $175.6 million last year. It posted an operating margin of 17.1%, up 160 basis points from 15.5% in the same quarter last year.

Abercrombie & Fitch’s Financial Health Appears Stable

At the end of the second fiscal quarter, Abercrombie had $572.7 million in cash and cash equivalents, with no long-term net debt and equity of $1.3 billion, excluding non-controlling interests.

The company had liquidity of $1 billion at the end of the second fiscal quarter, including cash and equivalents. Net cash from operating activities was $113 million as of August 2, 2025.

During Q2 2025, the company repurchased approximately 0.6 million shares for about $50 million. Since the beginning of the year through August 2, 2025, a total of 3.2 million shares were repurchased for $250 million, reducing the number of shares outstanding by 7% before the impact of stock-based compensation. ANF still has $1.05 billion available under the share repurchase program authorized in March 2025.

Abercrombie’s Outlook for Q3 and Fiscal Year 2025

Abercrombie & Fitch raised its net revenue guidance for the full year, with updated profitability reflecting the current estimated impact of $90 million in tariffs. For Q3 2025, net revenue is expected to increase by 5-7% compared to $1.21 billion last year. Operating margin for the quarter should be between 11% and 12%. The company forecasts EPS between $2.05 and $2.25, below last year’s $2.50. The effective tax rate is expected to be around 31%. These forecasts include share repurchases of at least $50 million and an average diluted share count of approximately 48 million.

For 2025, the company expects revenue growth of 5-7% compared to the previous year, revised upward from the prior estimate of 3-6%. This improvement is expected to be supported by growth across all regions and brands. ANF forecasts an operating margin between 13% and 13.5%, up from previous estimates of 12.5% to 13.5%.

For 2025, management anticipates an average diluted share count of about 49 million, reflecting the impact of $400 million in share buybacks in 2025. Coupled with the tax rate, ANF expects EPS between $10 and $10.50, compared to previous guidance of $9.50 to $10.40.

Abercrombie expects an effective tax rate of around 30% for 2025. Capital expenditures are estimated at $225 million for the current year.

For 2025, Abercrombie plans to open 60 stores, renovate and resize 40, and close 20.

How Have Estimates Evolved Since Then?

Since the earnings release, investors have observed a downward trend in estimate revisions.

The consensus estimate has changed by -12.42% due to these modifications.

VGM Scores

Currently, Abercrombie has a good growth score of B, though it is very behind on momentum with an F. However, the stock earns an A score on value, placing it in the top 20% for value-focused investors.

Overall, the stock has a combined VGM score of B. If you do not focus on a single strategy, this is the score you should consider.

Outlook

Estimates have generally been trending downward for the stock, and the extent of these revisions indicates a downward trend. It is worth noting that Abercrombie has a Zacks Rank of #3 ( Hold ). We expect the stock to deliver market-like returns in the coming months.

Sector Performance

Abercrombie belongs to the Zacks Retail - Apparel and Shoes sector. Another stock in the same sector, Tapestry ( TPR ), gained 5.1% over the past month. More than a month has passed since the company reported its results for the quarter ending June 2025.

Tapestry reported revenue of $1.72 billion in the last quarter, a +8.3% year-over-year change. EPS of $1.04 for the same period compares to $0.92 a year earlier.

For the current quarter, Tapestry is expected to earn $1.21 per share, representing an +18.6% change from the same quarter last year. The Zacks consensus estimate has changed by +1.4% over the past 30 days.

Management and the extent of estimate revisions result in a Zacks Rank of #3 ( Hold ) for Tapestry. Additionally, the stock has a VGM score of B.