Abercrombie & Fitch (NYSE:ANF) reported record second-quarter fiscal 2026 net sales of $1.27 billion, up 5% from a year earlier, as growth across regions and brands exceeded the company’s prior outlook. The retailer also raised its full-year sales, operating-margin and earnings-per-share expectations, citing first-half execution and a strong start to August.
Chief Executive Officer Fran Horowitz said the quarter marked the company’s 15th consecutive quarter of top-line growth. Both the Abercrombie and Hollister brands posted record second-quarter sales, while the company returned $177 million to shareholders through share repurchases during the period.
Tariff Refund Lifted Reported Profitability
Second-quarter operating income totaled $253 million, producing an operating margin of 19.9%, compared with adjusted operating income of $168 million and an adjusted operating margin of 13.9% a year earlier. Adjusted results exclude a $39 million net benefit from a favorable litigation settlement recorded in the second quarter of fiscal 2025.
Chief Financial Officer Robert Ball said the company received and recognized about $100 million in refunds related to IEEPA tariffs during the quarter. The amount was recorded as a reduction in cost of sales and contributed roughly 790 basis points to operating margin and approximately $1.75 to diluted earnings per share.
Diluted earnings per share were $4.17, compared with adjusted EPS of $2.32 in the prior-year quarter. The result exceeded the company’s previous guidance of $1.80 to $2.00 per share, including when accounting for the tariff-refund benefit, Ball said.
Ball added that the company’s performance exceeded its prior operating-margin outlook by about 990 basis points. While the tariff refund accounted for roughly 790 basis points of that outperformance, the remaining approximately 200 basis points primarily reflected stronger gross margin and operating leverage on sales that surpassed expectations.
Comparable sales were flat for the quarter, while average unit retail, or AUR, rose by the mid-single digits. Ball said lower promotional activity supported better-than-expected AUR performance, while unit sales also increased.
Regional and Brand Performance
Sales rose 5% in the Americas, 19% in Asia-Pacific and 2% in Europe, the Middle East and Africa. Comparable sales increased 1% in the Americas and 13% in APAC, while declining 4% in EMEA. The company said the United Kingdom remained a strong market, while Germany returned to growth and the Middle East improved sequentially as inventory and receipts were managed more closely.
Abercrombie-brand sales increased 8%, accelerating from 3% growth in the first quarter, while comparable sales rose 4%. Horowitz cited improved conversion, AUR and full-price selling, particularly in the Americas. Knits, wovens, pants and shorts contributed to growth, and the business was balanced across genders and categories, she said.
Hollister sales rose 2% against a 19% increase in the prior-year quarter, while comparable sales declined 3%. The brand’s sales growth accelerated from a flat first quarter, with growth across regions and genders. Horowitz said Hollister experienced demand that at times exceeded available inventory during the quarter, with the team subsequently chasing product to support the back-to-school season.
“We’ve seen that Hollister growth accelerate from its Q2 level so far in August,” Ball said, adding that the company was pleased with the brand’s product assortment and momentum heading into the third quarter.
New Distribution Channels and Product Categories
The company highlighted its Hollister collaboration with Target as a contributor to second-quarter sales growth. The partnership, which includes products in more than 1,500 Target locations, represented Hollister’s first meaningful U.S. wholesale and category expansion. The retailer said the program introduced the brand to new customers and expanded its offering into dorm-related products.
Horowitz said the Target initiative showed the potential for Hollister to extend beyond apparel, though executives characterized the effort as early stage and did not quantify its sales contribution. Management said the partnership had generated healthy product sell-through and helped the company evaluate its longer-term opportunity in new channels.
Abercrombie & Fitch also plans to broaden distribution of its NFL merchandise this fall through nflshop.com, NFL stadium stores, official team e-commerce sites and Fanatics.com. The company is entering its second year as the NFL’s official fashion partner. In addition, executives said they have seen encouraging initial results in footwear and accessories across both brands.
Management said these initiatives are currently small relative to the overall business but could expand the company’s addressable market, provide access to new customers and diversify growth drivers without requiring significant capital deployment.
Updated Outlook and Capital Returns
For fiscal 2026, Abercrombie & Fitch now expects sales growth of about 5% from $5.27 billion in fiscal 2025, with growth across regions and brands. The company forecasts operating margin of 14.5% to 15%, including an estimated 220-basis-point benefit from total expected IEEPA tariff refunds of about $120 million.
- Full-year diluted EPS is projected at $13.10 to $13.60, including an estimated $2.10 benefit from IEEPA tariff refunds.
- Third-quarter sales are expected to increase 5% to 6% from $1.3 billion in the prior-year period.
- Third-quarter operating margin is forecast at 13% to 14%, including an expected $20 million tariff refund benefit.
- Third-quarter EPS is projected at $2.90 to $3.20, including an estimated $0.35 tariff-refund benefit.
- Capital expenditures are expected to total about $250 million, supporting approximately 130 net new store experiences, including 50 new stores and 80 remodels or right-sizings, against about 20 closures.
The company ended the quarter with $628 million in cash and cash equivalents and about $1.1 billion in liquidity. It repurchased $282 million of shares in the first half, representing about 7% of shares outstanding at the beginning of the year. Management now expects to return at least $500 million to shareholders through share repurchases in fiscal 2026.
Ball said the tariff refunds do not change the company’s capital-allocation framework, which includes investment in brand growth and continued cash returns to shareholders. The company had $568 million remaining under its current repurchase authorization at quarter-end.
About Abercrombie & Fitch (NYSE:ANF)
Abercrombie & Fitch Co (NYSE: ANF) is an American specialty retailer that designs, markets and sells casual apparel and accessories for men, women and children. Founded in 1892 by David T. Abercrombie and Ezra Fitch, the company evolved from an outdoor gear outfitter to a global lifestyle brand renowned for its relaxed, preppy aesthetic. Its product assortment includes tops, bottoms, outerwear, intimates, swimwear, fragrances and personal care items.
The company operates under multiple brand names, including Abercrombie & Fitch, Abercrombie Kids, Hollister and Gilly Hicks, each targeting distinct consumer segments from teens to young adults.
