Abercrombie & Fitch Co. Q2 FY2025 earnings call

• Second quarter results showed 11th consecutive quarter of growth, exceeding top and bottom line expectations. - Repurchased $50 million of stock this quarter, total $250 million year-to-date. - Hollister benefited from strong cross-channel traffic, brand activations, and updated collections. - Abercrombie executed on goals using promotions to manage inventory and test new product concepts. - Opened 13 new stores in Q2, with 14 planned this quarter. - Announced Abercrombie & Fitch as Official NFL Fashion Partner. - abercrombie kids launched globally in department stores.

Second quarter net sales reached a record $1.2 billion, growing 7% over last year. Regionally, Americas achieved 12th consecutive quarter of growth with net sales up 8%. EMEA had regional net sales lower by 1% against 16% growth in Q2 2024. APAC grew 12%. Hollister brands delivered record first half sales, with net sales growing 19% in Q2 and comparable sales up 19%. Abercrombie had net sales lower by 5% in Q2, with AUR lower year-over-year but exited Q2 with inventory in good shape.

• Increased full year net sales forecast. - Full year net sales expected in range of 5% to 7% from $4.95 billion in 2024. - Full year GAAP operating margin expected in range of 13% to 13.5%. - Third quarter 2025 net sales expected up 5% to 7% to Q3 2024 level of $1.2 billion. - Third quarter operating margin expected in range of 11% to 12%. - Anticipates around $400 million in share repurchases for the year, subject to conditions.

• Tariffs impacting cost of sales, with an assumed $90 million impact for the year. - Third-party channel headwinds in EMEA. - Uncertainties in tariff landscape affecting margins and consumer experience.

Q: As you think about the Abercrombie brand, what are the markers giving confidence for acceleration?

A: Fran Horowitz mentioned the brand is in great shape, strong traffic, exciting partners like NFL, investing in stores, working through carryover inventory, and good reads on Boho and Western.

Q: Can you clarify the credit card settlement inclusion in guidance?

A: Robert J. Ball said the guide moved due to interchange benefit of $39 million and incremental tariffs, net about $40 million, with Q2 outperformance rolling through.

Q: Update on marketing in third quarter?

A: Robert J. Ball said marketing investments increased by over 100 basis points, funding full funnel strategies including partnerships like NFL and fall campaigns.

Q: Elaborate on tariff impact and mitigation?

A: Robert J. Ball stated measured approach with levers like country-of-origin footprint, vendor negotiations, operating expense efficiencies, and pricing, with tactics to take shape in 2026.

Q: Outlook for Abercrombie's return to sales growth?

A: Fran Horowitz said first half was second best in brand history, brand in great shape, strong traffic, exciting partners, and confident in return to growth by end of year.