Abercrombie & FitchThe growth story of .
The apparel retailer’s stock plunged 15% on Wednesday after issuing weaker than expected guidance in the current quarter and 2025, saying it expects sales to grow slowly than Wall Street expected.
According to LSEG, Abercrombie expects sales to increase by 3% to 5% in fiscal year 2025. During the current quarter, the company expects earnings per share to range from $1.25 to $1.45, with no forecast of $1.97.
The slowdown of Abercrombie’s brand of the same name has exacerbated concerns. This segment has led the company’s growth in previous quarters than Hollister, which is more useful for teenagers.
During the quarter, sales at Abercrombie increased by just 2%, while sales at Hollister increased by 16%. Equivalent sales at Abercrombie increased by 5%, while Hollister Comp spiked 24%.
Sales of the Abercrombie brand continued to slow down until February, becoming negative for the month, CEO Fran Horowitz said in a call with analysts.
“Last year we had a slightly perfect transition to the spring, but this year we have a little more regularised (company sales are on sale in February) and there was a bit of a difference between brands.
When asked where macroeconomic conditions and anything else were driving that slowing down, executives didn’t actually answer, saying they were watching “spring green shoots.”
Beyond guidance and slowing growth, Abercrombie slightly beat Wall Street expectations in the fourth quarter. Based on analyst research by LSEG, here is how the retailers performed compared to what Wall Street had expected:
Earnings per share: $3.57 vs. $3.54 forecast revaluation: $1.58 billion vs. $1.57 billion
The company had net income for the three months ended February 1 at $158 million, or $3.57 per share, prior to $2.97 per share.
Revenue rose to $1.58 billion, up 9% from $1.45 billion the previous year. Like other retailers, Abercrombie benefited from the same period last year’s sales week. While many companies distorted negative comparisons, Abercrombie sales jumped even when sales were low in a week.
Beyond sales and revenue, Abercrombie said she expects another key metric: operating margins to be lower than Wall Street, which is expected this quarter. According to StreetAccount, Abercrombie expects its operating profit margin to range from 8% to 9%, which is quite lagging behind its 12.8% estimate.
In January, Abercrombie released early results and gave investors a glimpse into their holiday performance when they raised their fourth quarter outlook. Still, inventory fell that day as Abercrombie expected to ease its growth and showed that its operating margin would not increase beyond previous forecasts. After Abercrombie published its first quarter guide, concerns about its operating margins may have increased.
However, not all of Abercrombie’s guidance was disappointing. According to LSEG, sales are expected to increase between 4% and 6% in line with forecasts of 5.8% in the current quarter. For the full year, revenue is expected to range from $10.40 to $11.40 per share.
With nearly two years of explosive stock and sales growth, Abercrombie’s business appears to be leveling, with the market likely turning its back on its retail biggest star, giving it a name more instantaneous and more instantaneous.
The company is still growing and is working to build an international market, but it is unclear whether it is still seeing the number of blockbusters that have come out after implementing turnaround under CEO Horowitz. It faces a tough year-over-year comparison, and some of the talk from the turnaround may be beginning to fade.
Furthermore, consumers have been remarkably cautious since the beginning of the year, constantly putting pressure on specialist retailers who sell discretionary items like clothing. Massive tragedies like geopolitics, cool, out-of-season weather, and the wildfires of Los Angeles have weakened consumer demand, but shoppers are worried about rising prices from tariffs and more. In February, consumer trust fell to its lowest level since 2021.
The fact that Hollister is growing faster than Abercrombie and accounts for a large portion of sales marks a turning point for the company, indicating that teen-focused brands could once again become important growth drivers. It also pressures management to do more to stimulate the Abercrombie brand and to keep it from stagnating.
Earlier this year is a little worse than expected for many other companies. target and The beauty of the elf. Like the Elf, Abercrombie may have seen the impact from the proposed ban on Tiktok. This was dragged by the performance of cosmetics companies at the beginning of the year.
Both companies rely heavily on Tiktok for marketing. In February, ELF CEO Tarang Amin told CNBC he suspected that the proposed ban had affected the sale of cosmetics.
In a January news release, Horowitz showed that by moving forward, Abercrombie will focus more on profitability than sales, as it “helps long-term shareholder value.”
“Following the expected two years of double-digit top and bottom line growth, we are as confident as ever in the power of our brand and operating model to move forward, backed by the great features we have built,” Horowitz said. “In 2025, we will consider continuing sustainable and profitable growth through the execution of our playbooks to attract and retain customers around the world. Our goal is to leverage healthy margin structure and balance sheets to increase operating profit, sales fees and earnings per share.”
The proposal came true on Wednesday when Abercrombie announced its new $1.3 billion share repurchase approval, and said it was expected to spend $400 million on share repurchase in 2025.
