Abercrombie & Fitch Co. (NYSE: ANF), the teen and young-adult clothing retailer behind the Abercrombie and Hollister brands, saw its shares surge as much as 37% today after second-quarter results smashed analyst forecasts and the company raised its full-year outlook.
The stock last traded at $149.37, up 37.2% from Tuesday’s close of $108.90, having touched an intraday high of $150.09. The move marks a sharp reversal for a stock that had been down around 13% for the year through Tuesday’s close.
Abercrombie reported non-GAAP diluted earnings per share of $4.17 for the quarter, far above its own prior guidance of $1.80 to $2.00 and consensus estimates near $1.95 to $1.99. Net sales rose 5% year on year to $1.267bn, beating expectations of around $1.24bn. The company raised its full-year EPS guidance to $13.10-$13.60, from $10.20-$11.00 previously, and lifted its sales-growth outlook to around 5% from 3%-5%. Even excluding the tariff refund described below, the company still beat its prior guidance, chief financial officer Robert Ball said.
A large part of the beat was a one-off item: an approximately $100m pre-tax refund tied to tariffs imposed under the International Emergency Economic Powers Act, booked as a reduction to cost of sales. That refund added about $1.75 to the $4.17 EPS figure and roughly 790 basis points to an operating margin that came in at 19.9%, against an outlook of around 10%. Companywide comparable sales, a measure of sales at stores open at least a year, were flat, with Hollister comps down 3% even as the Abercrombie brand’s comps rose 4%.
Chief executive Fran Horowitz said the company had delivered “record second quarter net sales and our 15th consecutive quarter of growth, reflecting our teams’ continued focus on serving customers with compelling product, marketing, and experiences.” Abercrombie also raised its share-buyback target to at least $500m for the year, from around $450m, having already repurchased $282m of stock.
For the current quarter, the company guided to sales growth of 5%-6% and EPS of $2.90-$3.20, including an estimated $0.35 benefit from the tariff refund. Comparable sales remain flat.