stockrowLatest quarter
Abercrombie & Fitch reported quarterly revenue of $1.3 billion, above the consensus estimate of $1.2 billion. Adjusted earnings per share, as counted by the consensus, were $2.42, above the $1.95 estimate. Revenue rose 4.81% from a year earlier, while reported diluted earnings per share increased to $4.17 from $2.91.
CFO Robert Ball said Abercrombie brands’ sales rose 8% and Hollister sales increased 2%. Comparable sales were flat overall, with new stores and third-party channels contributing to the difference between total and comparable sales growth. The company’s filing attributed the sales increase partly to higher average selling prices and new stores, offset in part by lower unit volume.
Gross margin rose to 71.1% from 62.6%, and operating margin increased to 19.9% from 17.1%. Ball said tariff refunds reduced cost of sales and contributed approximately 790 basis points to operating margin. Free cash flow rose to $201.1 million from $50.7 million a year earlier.
| Q2 FY2027 | Q2 FY2026 | Change | |
|---|---|---|---|
| Revenue | $1.3 billion | $1.2 billion | 4.81% |
| Diluted EPS | $4.17 | $2.91 | 43.3% |
| Gross margin | 71.1% | 62.6% | 8.5 percentage points |
| Operating margin | 19.9% | 17.1% | 2.9 percentage points |
| Free cash flow | $201.1 million | $50.7 million | 296.6% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $2.42 | $1.95 | Beat by 24.1% |
| Revenue | $1.3 billion | $1.2 billion | Beat by 1.94% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
CEO Fran Horowitz-Bonadies said demand exceeded available inventory at points during the quarter, prompting the team to pursue additional supply; she said inventory had since caught up. CFO Robert Ball said Hollister’s growth accelerated from its quarterly level in August as the back-to-school season continued.
Asked about pricing and units, Ball said average unit retail came in above expectations because of reduced promotions. He said the company was seeing improved conversion across both brands alongside lower discounts and more units sold. Horowitz-Bonadies said the company reviews its own business week by week rather than setting promotions according to competitors’ actions.
Ball said the company recognized approximately $100 million of tariff refunds in the quarter, contributing approximately $1.75 to diluted earnings per share. He said the company exceeded its operating-margin outlook beyond the refund benefit, primarily through gross margin and operating leverage on higher sales. Asked about costs ahead, Ball said freight had offset some of the benefit from lower tariff rates: “The rates have remained elevated.”
Horowitz-Bonadies said Hollister’s Target collaboration contributed to quarterly sales growth and reached new customers. Ball said the company was evaluating the longer-term opportunity from the partnership but was not sizing it yet. He also said third-party channels offered access to customers and categories without requiring substantial capital deployment.
On investment, Horowitz-Bonadies pointed to technology spending, including the enterprise resource planning system completed in March. Asked whether refunds would change capital allocation, Ball said: “The refunds don’t change how we allocate capital in our business.” He said the company would continue to invest in its brands and return cash to shareholders.
Guidance
On the call, Robert Ball said Abercrombie & Fitch raised its full-year sales, operating-margin and earnings-per-share outlook after its first-half performance and the start of August.