Abercrombie & Fitch stock surged after beating earnings and raising its annual forecast

Abercrombie & Fitch Co. (NYSE: ANF) reported stronger-than-expected second-quarter earnings and revenue, surpassing analyst predictions and prompting a 11% rise in shares premarket. The apparel retailer posted adjusted earnings per share of $4.17, significantly beating the consensus estimate of $1.98. Revenue rose to $1.3 billion, a 5% year-over-year increase, outperforming the $1.25 billion forecast.

Approximately $100 million in pre-tax IEEPA tariff refunds contributed to earnings per diluted share of $1.75. Operating margin reached 20%, a notable improvement from the company's earlier outlook of around 10%. Net sales expanded in all regions, with the Americas up 5%, APAC up 19%, and EMEA up 2%. Both Abercrombie and Hollister brands recorded record quarter sales, with Abercrombie Brands growing 8% and Hollister up 2%.

Comparable sales remained flat. CEO Fran Horowitz praised the company's teams for their commitment to delivering compelling products, marketing, and experiences. For the upcoming third quarter, Abercrombie & Fitch forecasts earnings per share between $2.90 and $3.20, with a midpoint of $3.05, exceeding the analyst consensus of $2.85.

Net sales are expected to grow 5% to 6%. The company has also raised its full-year outlook, projecting earnings per share between $13.10 and $13.60, a midpoint of $13.35 that surpasses the consensus estimate of $10.73. Full-year net sales growth now anticipates around 5%, up from the previous range of 3% to 5%. Operating margin is now expected to be between 14.5% and 15.0%, including around 220 basis points of favorability from IEEPA tariff refunds.