Q2 2026 Abercrombie & Fitch Co Earnings Call Transcript
Key Points
- Record second-quarter net sales of $1.3 billion, up 5%, marking the 15th consecutive quarter of top-line growth and exceeding the company's outlook.
- Both Abercrombie and Hollister brands achieved record second-quarter net sales, with Abercrombie growing 8% and returning to positive comparable sales growth of 4%.
- Strong regional performance, with APAC growing 19% and EMEA returning to growth at 2%, while the Americas grew 5%.
- The company raised its full-year net sales outlook to the high end of its prior range and increased operating margin and EPS expectations, reflecting confidence in continued profitable growth.
- Successful expansion into new channels and categories, including the Target partnership for Hollister and the NFL partnership for Abercrombie, which are driving incremental growth and reaching new customers.
- Strong cash flow and balance sheet enabled the return of $177 million to shareholders in the quarter, with year-to-date share repurchases totaling $282 million (7% of shares outstanding).
- Comparable sales were flat overall, with Hollister's comparable sales declining 3% and EMEA comparable sales down 4%, indicating some underlying softness.
- The company's results were significantly boosted by a one-time $100 million IEEPA tariff refund, which contributed 790 basis points to operating margin and $1.75 to EPS, masking underlying performance.
- Ongoing tariff expenses and elevated freight costs are expected to offset each other, limiting gross margin expansion in the second half of the year.
- Hollister's demand was constrained by inventory shortages during the quarter, potentially limiting sales growth and requiring a catch-up in the third quarter.
- The company faces operating expense deleverage in the third quarter due to incremental payroll and amortization costs from the ERP implementation, which could pressure margins.
- The full-year outlook includes a $120 million tariff refund benefit, which is non-recurring and may not be sustainable in future years, raising questions about the quality of earnings.
Good day and welcome to the Abercrombie & Fitch second-quarter fiscal year 2026 earnings conference call. Today's call is being recorded. (Operator Instructions)
At this time, I would like to turn the conference over to Mo Gupta. Please go ahead.
Thank you. Good morning and welcome to our second-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 second-quarter earnings release, which is available on our website at corporate.abercrombie.com under the Investors section. Also available on our site 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 the risks and uncertainties that could cause
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