Shares of Abercrombie & Fitch (NYSE:ANF) fell 6.4% Wednesday morning after the company delivered solid fourth-quarter results but issued a cautious outlook for fiscal 2026, highlighting tariff-related margin pressure and moderating growth.
The retailer posted record fourth-quarter net sales of $1.67 billion, up 5% year-over-year, marking its thirteenth consecutive quarter of growth. Comparable sales rose 1%.
Operating income came in at $236 million, down from $256 million a year earlier, while operating margin contracted to 14.1% from 16.2%. Net income per diluted share rose to $3.68 from $3.57 last year.
Despite the top-line growth and an earnings beat relative to expectations, investors appeared focused on signs of slowing momentum and margin compression.
CEO Fran Horowitz said the company delivered record fiscal 2025 net sales growth of 6% and achieved its third straight year of double-digit operating margins.
However, the fiscal 2026 outlook suggests a more challenging environment ahead.
The company guided for full-year net sales growth of 3% to 5%, operating margins between 12% and 12.5%, and net income per diluted share of $10.20 to $11. For the first quarter, management expects sales growth of just 1% to 3% and operating margins around 7%, reflecting an estimated 290-basis-point headwind from tariffs.
Analysts at Jefferies described the fourth-quarter performance as solid, noting EPS of $3.68 modestly ahead of expectations. However, they characterized first-quarter guidance as light, with moderating growth and margin normalization ahead.
Tariffs were flagged as a key near-term pressure point.
