Young adult apparel retailer Abercrombie & Fitch (NYSE:ANF) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 6.8% year on year to $1.29 billion. The company expects next quarter’s revenue to be around $1.66 billion, close to analysts’ estimates. Its GAAP profit of $2.36 per share was 9.4% above analysts’ consensus estimates.
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Abercrombie and Fitch (ANF) Q3 CY2025 Highlights:
- Revenue: $1.29 billion vs analyst estimates of $1.28 billion (6.8% year-on-year growth, 0.9% beat)
- EPS (GAAP): $2.36 vs analyst estimates of $2.16 (9.4% beat)
- Adjusted EBITDA: $193.6 million vs analyst estimates of $191.2 million (15% margin, 1.2% beat)
- Revenue Guidance for Q4 CY2025 is $1.66 billion at the midpoint, roughly in line with what analysts were expecting
- EPS (GAAP) guidance for the full year is $10.35 at the midpoint, beating analyst estimates by 2.9%
- Operating Margin: 12%, down from 14.8% in the same quarter last year
- Locations: 828 at quarter end, up from 773 in the same quarter last year
- Same-Store Sales rose 3% year on year (16% in the same quarter last year)
- Market Capitalization: $4.25 billion
StockStory’s Take
Abercrombie & Fitch’s third quarter results were met with a positive market reaction, driven by strong momentum at Hollister and resilient performance across core categories despite margin compression. Management credited double-digit growth in the Hollister brand, successful brand collaborations, and disciplined inventory management as key drivers. CEO Fran Horowitz noted, “Our traffic is positive. Our customer file continues to grow. We're seeing nice engagement in our digital and stores channels.” The company also highlighted the effectiveness of targeted marketing and product launches, particularly in women’s and seasonal categories.
Looking forward, Abercrombie & Fitch’s guidance reflects a focus on maintaining Hollister’s growth, returning Abercrombie brands to positive sales territory, and mitigating tariff impacts. Management plans to increase targeted pricing after the holiday season and continue marketing investments, with CFO Robert J. Ball stating, “We are taking targeted price increases here for the spring, so that will start delivering here post-holiday.” The company will also lean on new partnerships and technology investments to drive customer engagement and manage cost pressures while navigating a dynamic retail environment.
Key Insights from Management’s Remarks
Management attributed the latest quarter’s performance to Hollister’s continued growth, robust customer traffic, and strategic collaborations, while acknowledging margin pressures from tariffs and increased marketing.
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Hollister brand acceleration: Hollister delivered 16% net sales growth, with management pointing to strong cross-channel traffic and balanced gains across both men’s and women’s categories. CEO Fran Horowitz highlighted the success of keeping inventories tight and introducing new products, which supported higher average unit retail (AUR) with fewer promotions.
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Abercrombie brand stabilization: Although Abercrombie brand sales were down, management emphasized sequential improvement, particularly in women’s apparel, and successful seasonal transitions in key categories like denim, fleece, and sweaters. The brand’s customer file and engagement metrics showed positive trends, aided by ongoing marketing efforts and store openings.
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Impact of tariffs on margins: Tariff expenses reduced operating margin by 210 basis points in the quarter, with management noting this as the primary driver of margin compression. CFO Robert J. Ball emphasized ongoing mitigation strategies, including sourcing diversification and targeted price increases to offset future tariff costs.
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Collaborations and marketing investments: Management credited brand collaborations—such as those with Taco Bell, NFL, and Kimo Sabe—for driving new customer acquisition and brand awareness. These partnerships are designed for authentic engagement and are expected to remain a core part of the marketing strategy.
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Technology and omnichannel investments: The company continues to invest in digital transformation, deploying AI-powered customer service agents and launching partnerships to enable seamless commerce experiences. These initiatives aim to enhance customer journeys and support long-term scalability.
Drivers of Future Performance
Management expects future performance to hinge on sustaining Hollister’s growth, executing pricing strategies to offset tariffs, and leveraging technology investments for efficiency.
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Tariff mitigation and pricing actions: Management is implementing targeted price increases after the holiday season, aiming to offset ongoing tariff headwinds. CFO Robert J. Ball stated these price adjustments will begin with spring deliveries, while continued vendor negotiations and sourcing diversification are expected to provide further relief in the coming year.
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Marketing and brand investments: The company plans to sustain elevated marketing spend, focusing on collaborations and campaigns that drive customer engagement and acquisition. Management believes these efforts will support both near-term performance and long-term brand equity.
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Technology-driven efficiency: Ongoing investments in AI and digital platforms, such as AI-powered customer service and partnerships with platforms like PayPal and Symbio, are expected to streamline operations, improve the customer experience, and enable more agile response to changing consumer behaviors.
Catalysts in Upcoming Quarters
Going forward, the StockStory team will monitor (1) the effectiveness of targeted price increases and their impact on traffic and sales growth, (2) the pace and scale of new brand collaborations and marketing campaigns, and (3) progress in digital and AI-driven initiatives designed to improve operational efficiency and customer experience. Additionally, how well Abercrombie & Fitch manages tariff headwinds while sustaining momentum at Hollister will be a key factor to watch.
Abercrombie and Fitch currently trades at $89.80, up from $65.87 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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