Abercrombie & Fitch Q2 2025 slides: Hollister drives growth as company raises outlook

Introduction & Market Context

Abercrombie & Fitch Co. (NYSE:ANF) released its second quarter 2025 earnings presentation on August 27, showcasing strong overall performance despite mixed results across its brand portfolio. The company reported net sales of $1.2 billion, up 7% year-over-year, with earnings significantly exceeding guidance. Despite these positive results, ANF shares were trading down 3.38% in premarket at $93.47, suggesting investors may have been anticipating even stronger performance following the company’s exceptional first quarter.

The Q2 results continue the company’s multi-year growth trajectory, with particularly strong performance from its Hollister brand offsetting weakness in the Abercrombie segment. This quarter’s performance builds on the momentum seen in Q1 2025, when the company reported an EPS of $1.59 against expectations of $1.33, which had driven a 32.79% surge in the stock price.

Quarterly Performance Highlights

Abercrombie & Fitch delivered impressive financial results in Q2 2025, with net sales reaching $1.2 billion, representing a 7% increase year-over-year. The company’s operating margin reached 17.1% on an adjusted non-GAAP basis, significantly exceeding the outlook of 12-13%. Net income per diluted share was $2.91 (adjusted non-GAAP), well above the company’s guidance of $2.10-$2.30.

As shown in the following quarterly financial highlights:

The performance across brands revealed divergent trends. Hollister brands, which target Gen Z consumers aged 13-21, saw net sales surge by 19% year-over-year to $657 million. In contrast, Abercrombie brands, which target millennials aged 23-40+, experienced a 5% decline, with sales of $552 million.

The brand performance breakdown illustrates this contrast:

Regional performance was mixed, with the Americas leading growth at 8% year-over-year, followed by APAC at 12%, while EMEA experienced a slight decline of 1%. The Americas remain the dominant market, accounting for $974 million in quarterly sales.

Detailed Financial Analysis

The company’s profitability metrics showed significant strength in Q2 2025, with operating income reaching $207 million and net income per diluted share at $2.91. These results demonstrate substantial improvement compared to previous quarters and reflect the company’s successful execution of its financial discipline strategy.

The quarterly operating income and earnings per share trends are illustrated below:

Abercrombie & Fitch maintained a strong financial position with $573 million in cash and equivalents, though this represents a decrease from $738 million in the same period last year. The company reported total liquidity of $1.0 billion, with no short-term borrowings outstanding and $450 million available under its ABL facility.

The following chart shows the company’s cash position over recent quarters:

The company has continued its aggressive share repurchase program, buying back approximately 10 million shares for $606 million since the beginning of 2022. In Q2 2025 alone, the company repurchased around $50 million in shares, contributing to the reduction in diluted weighted average shares to 48.5 million.

Forward-Looking Statements

Abercrombie & Fitch raised its fiscal 2025 outlook, projecting net sales growth of 5-7% and an operating margin between 13.0-13.5%. The company expects net income per diluted share to range from $10.00 to $10.50, supported by approximately $400 million in share repurchases.

For the third quarter of 2025, the company forecasts net sales growth of 5-7%, an operating margin of 11-12%, and net income per diluted share between $2.05 and $2.25.

The detailed fiscal 2025 outlook is presented below:

This guidance reflects confidence in the company’s long-term growth trajectory, as illustrated in the multi-year performance chart showing the progression from the COVID-impacted FY2020 to the projected strong performance in FY2025:

Strategic Initiatives

Abercrombie & Fitch’s presentation highlighted three key strategic pillars driving its growth: global brand expansion, digital transformation, and financial discipline. The company is focusing on collection extensions, digital customer acquisition through social commerce platforms like Instagram, TikTok, and WeChat, and geographic expansion across the Americas, EMEA, and APAC regions.

The company’s digital strategy is particularly important, with 60% of Abercrombie brand sales coming through digital channels compared to 30% for Hollister brands. The company is investing in modernizing its retail ERP systems, creating consistent omnichannel experiences, and developing a more powerful loyalty program.

Financial discipline remains central to the company’s strategy, with ongoing efforts to optimize cost of sales (projected at 35.8% of net sales in FY2024, down from 43.1% in FY2022) and selling expenses (projected at 34.2% in FY2024, down from 39.5% in FY2022).

The company plans approximately 40 net new store openings in FY2025, along with 40 remodels and right-sizes, supported by capital expenditures of around $225 million. This balanced approach to physical retail expansion, coupled with digital investment, positions Abercrombie & Fitch to continue its growth trajectory despite the challenging retail environment.

Full presentation:

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