Abercrombie & Fitch Co., a global apparel retailer known for its lifestyle brands including Abercrombie and Hollister, reported first-quarter fiscal 2025 earnings that showcased both achievements and challenges. The company recorded net sales of $1.1 billion, representing an 8% increase compared to the same period last year, exceeding its previous guidance of 4% to 6% growth. This performance was boosted by growth across all regions: the Americas increased by 7%, EMEA by 12%, and APAC by 5%.

However, the financial outlook varied significantly by brand. Hollister reported a substantial net sales increase of 22%, achieving 23% comparable sales growth, marking its best ever first-quarter results. In contrast, Abercrombie’s brands experienced a 4% decline in net sales and a 10% drop in comparable sales, following a year where it saw a notable 31% jump in sales. This decline was attributed primarily to a decrease in average unit retail (AUR) due to winter inventory clearance.

Abercrombie & Fitch’s operating margin for the quarter stood at 9.3%, down from 12.7% the previous year, while earnings per share reached $1.59, compared to $2.14 last year. Operating income was reported at $102 million, a decline from $130 million in the same quarter a year ago. The company maintained a conservative approach to expenses, with operating expense leverage contributing approximately 140 basis points to the margin calculation, though this was offset by lower gross margin driven by inventory and marketing investments.

In terms of capital allocation, Abercrombie & Fitch utilized its strong balance sheet to initiate share repurchases totaling $200 million in Q1, equivalent to 5% of shares outstanding, with $1.1 billion remaining on its current share repurchase authorization. Cash and cash equivalents at quarter-end totaled $511 million, down from $864 million year-over-year, while total liquidity, counting borrowing availability under its revolving credit facility, amounted to approximately $940 million.

Looking ahead, Abercrombie & Fitch increased its full-year net sales growth forecast to between 3% to 6%, up from an earlier estimate of 3% to 5%. Meanwhile, the operating margin projection was adjusted downward to a new range of 12.5% to 13.5%, influenced by anticipated tariff costs that are expected to impact the operating margin by approximately 100 basis points. The company is forecasting a tax rate of around 27% and net income per diluted share between $9.50 and $10.50 for fiscal 2025. Additionally, Abercrombie plans to open approximately 100 new retail experiences throughout the year.

For the second quarter, the company expects net sales to increase between 3% to 5%, with an anticipated operating margin between 12% and 13%, and earnings per share projected in the range of $2.10 to $2.30, alongside expected share repurchases of $50 million.