Record Q1 Net Sales and Multi-Quarter Growth
Record first quarter net sales of $1.1 billion, up 2% year-over-year, marking the 14th consecutive quarter of net sales growth and a company record for Q1.
Abercrombie Fitch
· ANF
May 27th, 2026
Summary
- Earnings Call Date:
- 2026-05-27
- Change Since:
- +9.10%
- Next Earnings Date:
- 2026-08-20
Earnings Call Sentiment
PositiveThe call conveyed a net-positive message: the company delivered record Q1 net sales, beat expectations on operating margin and EPS, completed a key ERP modernization and continued to return capital to shareholders while maintaining full-year guidance. Material near-term headwinds were acknowledged — notably EMEA weakness tied to the Middle East conflict, ERP-related order limits that trimmed growth, tariff/freight uncertainty, and some year-over-year profit pressure — but management described clear mitigation actions (inventory controls, targeted promos, disciplined investments) and reiterated confidence in achieving full-year targets.
Company Guidance
Abercrombie & Fitch reiterated its 2026 guidance calling for full-year net sales growth of 3%–5% (vs. $5.27B in 2025) with operating margin of 12%–12.5% and diluted EPS of $10.20–$11, while targeting ~$450M in share repurchases for the year; specific assumptions include ~44M diluted shares, ~30% full-year tax rate, ~$225M CAPEX, ~130 new experiences (50 new stores / ~80 remodels & rightsizes, ~net +30 stores), and modest AUR improvement with ~40bps FX tailwind. For Q2 they expect net sales up 2%–4% to a comparable Q2 2025 base of ~$1.2B, operating margin around 10% (including ~$20M / ~120bps of unfavorable tariff impact), a Q2 tax rate of ~32%, diluted shares of ~45M and EPS of $1.80–$2 (including at least $150M of buybacks). Quarter-to-date context: Q1 record net sales of $1.1B (+2%, comps -1%), operating margin 8% (operating income $89M), adjusted EBITDA $131M (12% margin), EPS $1.47, regionals Q1 net sales: Americas +3% (comps +1%), APAC +24% (comps +15%), EMEA -10% (comps -11%); inventory at cost down 2% (units up low-single-digits), cash ~$594M and liquidity ~ $1B, $105M repurchased in Q1 (3% of shares) with $745M remaining authorization. Tariff outlook assumes 10% effective in Q2 and 15% on U.S. imports in H2 (driving ~20bps FY gross margin pressure vs. prior outlook); company has applied for ~ $100M of IEEPA refunds but assumed no benefit in guidance.
Strong Regional Performance — APAC and Americas
APAC net sales grew 24% (comps +15%) and the Americas grew 3% (comps +1%), with growth across brands and healthy traffic in both stores and digital in these regions.
Operating Results Above Expectations
Operating margin of 8% exceeded plan and results beat internal expectations on operating income and EPS; diluted EPS was $1.47 (above outlook). Adjusted EBITDA margin was 12% on adjusted EBITDA of $131 million.
Shareholder Returns and Strong Liquidity
Returned $105 million to shareholders in Q1 via share repurchases (≈3% of shares outstanding); ended Q1 with $594 million cash, ~ $1 billion liquidity, and $745 million remaining on share repurchase authorization; targeting $450 million of buybacks for 2026.
Successful ERP Cutover and Technology Investments
Completed upgraded merchandising ERP implementation in March (multiyear effort) to enable long-term channel/category expansion; continuing investments in AI (AI academy, Copilot premium, Perplexity testing) to improve forecasting, customer care and speed-to-market.
Brand and Product Momentum
Abercrombie Brands net sales grew 3% for the quarter with positive AURs and flat comps; Hollister saw strength in warm-weather categories (graphic tees, shorts, swim). Collaborations (Sperry, Kappa) and new store experiences (e.g., expanded SoHo Abercrombie) drove higher-than-average conversion.
Disciplined Inventory Management
Inventory at cost down 2% year-over-year while inventory units were up low single digits; management controlled receipts and promos regionally to align to demand, enabling tight inventory posture following ERP implementation.
Maintained Full-Year Guidance and Growth Plans
Maintained full-year outlook: net sales growth of 3%–5% to an expected $5.27 billion, operating margin guidance of 12%–12.5%, EPS guidance $10.20–$11.00, capital expenditures around $225 million, and plan for ~130 new experiences (50 new stores, 80 remodels/rightsizes).
Operator
Good day, and thank you for standing by. Welcome to the Abercrombie & Fitch First Quarter Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] Please be advised, today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mo Gupta, VP of Investor Relations. Please go ahead.
Mohit Gupta
Thank you. Good morning, and welcome to our First Quarter 2026 Earnings Call. Joining me today on the call are Fran Horowitz, Chief Executive Officer; Scott Lipesky, Chief Operating Officer; and Robert Ball, Chief Financial Officer. Earlier this morning, we issued our first quarter earnings release, which is available on our website at corporate.abercrombie.com under the Investors section. Also available on our website is an investor presentation. Please keep in mind that we will make certain forward-looking statements on the call. These statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions we mentioned today. These factors and uncertainties are discussed in our reports and filings with the Securities and Exchange Commission.
In addition, we will be referring to certain non-GAAP financial measures during the call. Additional details and reconciliations of GAAP to adjusted non-GAAP financial measures are included in the release and the investor presentation issued earlier this morning. With that, I'll hand it over to Fran.
Fran Horowitz-Bonadies
Thanks, Mo, and thanks, everyone, for j...
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