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Abercrombie & Fitch Co. ANF is scheduled to report second-quarter fiscal 2025 results on Aug. 27, before the opening bell. The Zacks Consensus Estimate for ANF’s fiscal second-quarter revenues is pegged at $1.2 billion, suggesting 4.8% growth from that reported in the year-ago quarter.
For fiscal second-quarter earnings, the consensus mark is pegged at $2.27 per share, implying a 9.2% decline from the $2.50 reported in the year-ago quarter. The consensus estimate for earnings has moved up 0.9% in the past 30 days.
In the last reported quarter, Abercrombie's earnings beat the consensus estimate by 17.8%. Moreover, ANF has delivered an earnings surprise of 11.2%, on average, in the trailing four quarters.
Our proven model conclusively predicts an earnings beat for Abercrombie this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Abercrombie currently has an Earnings ESP of +2.62% and a Zacks Rank of 3.
Abercombie began fiscal 2025 on a strong note, with first-quarter results surpassing expectations and achieving record sales. Sales growth in the fiscal second quarter is expected to have been driven by continued momentum at the Hollister brand and broad-based strength across the Americas, EMEA and APAC regions.
On the last reported quarter’s earnings call, management remained confident about its top-line performance in the quarters ahead due to its brand positioning and strategic initiatives, including digital innovation, agile inventory management and global partnerships.
Abercrombie expects to have benefited from further strengthening its brands and refining its agile operating model, with the Read & React inventory strategy remaining a key pillar of execution. On the digital front, ANF continues to enhance customer experience through faster delivery, improved product discovery and increased localization. These plans, supported by ongoing investments in technology to elevate omni-channel engagement, are expected to bolster the company’s fiscal second-quarter performance.
Backed by the strength across regions and the Hollister brand, the company outlined a strong sales outlook for the second quarter of fiscal 2025. For the fiscal second quarter, ANF projects net sales to increase 3-5% from the $1.13 billion recorded in the year-ago period. We expect a sales increase of 4.1% for the fiscal second quarter, with 6.1% growth for the Hollister brand and a 2.2% rise for the Abercrombie brand.
Abercrombie & Fitch Company price-eps-surprise | Abercrombie & Fitch Company Quote
However, the company’s results for the to-be-reported quarter are expected to reflect pressures from elevated operating costs and freight costs, which are expected to have weighed on margins. The Abercrombie brand continues to face headwinds, which is expected to have softened the brand’s sales and comparable sales due to inventory-related challenges and aggressive markdowns.
Additionally, amid a shifting global trade landscape, heightened tariffs are adding cost pressures for U.S. apparel retailers. The latest tariff environment includes a 10% duty on all global imports into the United States and a 30% tariff on imports from China, significantly impacting sourcing strategies and margin outlooks. On the cost side, Abercrombie’s outlook assumes the impacts of these tariff rates, although its China-specific sourcing is now reduced to a low-single digit due to proactive resource relocation.
On the last reported quarter’s earnings call, management anticipated the first half of fiscal 2025 to be hurt by increased year-over-year freight costs and more normalized carryover inventory selling. Despite mitigation efforts, the company anticipates impacts of the ongoing tariff headwinds to weigh on its margins and bottom-line performance for the second quarter and fiscal 2025.
For second-quarter fiscal 2025, the company expects the operating margin to be 12-13%, suggesting a decline from the 15.5% reported in the prior-year quarter. The operating margin view indicates a slight increase in freight costs and a net tariff impact of $5 million despite mitigation efforts.
At the midpoint of its outlook, ANF does not expect to see significant leverage or deleverage in operating expenses, indicating a stable cost structure despite ongoing macro pressures. Our model suggests that the operating margin will contract by 270 basis points year over year to 12.8% in the second quarter of fiscal 2025.
Abercrombie’s shares have exhibited an uptrend in the past three months, outperforming its industry peers and the Zacks Retail-Wholesale sector. In the past three months, the New Albany, OH-based company’s shares have rallied 34.6% compared with the industry and the sector’s growth of 3.4% and 8.5%, respectively. The company has also outpaced the S&P 500’s rally of 12% in the same period.
At the current price of $98.46, ANF trades 42.3% below its 52-week high of $17076. It trades 50.6% above its 52-week low mark of $65.40.
From the valuation standpoint, ANF trades at a forward 12-month P/E multiple of 9.45X, lower than the industry average of 18.22X and the S&P 500’s average of 22.87X. Abercrombie’s valuation appears attractive at this level.
Here are some companies, which, according to our model, have the right combination of elements to post an earnings beat this season:
Build-A-Bear Workshop BBW currently has an Earnings ESP of +11.00% and a Zacks Rank #2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2025 results. The consensus mark for BBW’s quarterly revenues is pegged at $114.7 million, which indicates a rise of 2.6% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Build-A-Bear’s earnings has moved up 6.3% in the past 30 days to 67 cents per share. The consensus estimate indicates growth of 2.6% from the year-ago quarter’s actual. BBW delivered a negative trailing four-quarter earnings surprise of 10.9%, on average.
American Eagle Outfitters Inc. AEO currently has an Earnings ESP of +5.00% and a Zacks Rank #3. The Zacks Consensus Estimate for second-quarter fiscal 2025 earnings per share has moved up by a penny in the past seven days to 20 cents, implying a 48.7% year-over-year decline. American Eagle’s top line is expected to fall year over year.
The Zacks Consensus Estimate for quarterly revenues is pegged at $1.2 billion, which indicates a decline of 4.8% from the figure reported in the prior-year quarter. AEO delivered a trailing four-quarter negative earnings surprise of 0.3%, on average.
Five Below, Inc. FIVE currently has an Earnings ESP of +13.35% and a Zacks Rank of 3. FIVE is likely to register top and bottom-line growth when it reports second-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $997.3 million, indicating 20.2% growth from the figure reported in the year-ago quarter.
The consensus estimate for FIVE’s earnings has moved up by a penny in the past 30 days to 61 cents per share. The consensus estimate indicates growth of 13% from the year-ago quarter’s actual. FIVE has a trailing four-quarter earnings surprise of 42.3%, on average.
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This article originally published on Zacks Investment Research (zacks.com).
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