Why Abercrombie Stock Rebounded Today
Key Points
Abercrombie & Fitch is on track to achieve its full-year profit forecast.
The company is returning $450 million to investors via stock buybacks.
Shares of Abercrombie & Fitch (NYSE: ANF) rose on Wednesday after the apparel seller's earnings topped Wall Street's estimates.
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Consistent sales growth
Abercrombie & Fitch's net sales rose 2% year over year to $1.1 billion in its fiscal 2026 first quarter, which ended on May 2. That marked the retail chain's 14th straight quarter of gains.
Sales in the company's Europe, Middle East, and Africa (EMEA) division fell 10% due to the ongoing conflict in the region. However, these declines were offset by a 3% rise in Abercrombie & Fitch's Americas segment and a 24% surge in its Asia-Pacific business.
Still, tariff-related costs weighed on the retailer's profits. Its operating margin declined to 8% from 9.3% in the prior-year quarter.
All told, Abercrombie & Fitch's earnings fell 8% to $1.47 per share. Yet that was well above analysts' estimates, which had called for per-share profits of $1.28.
Profitability is set to strengthen
Fortunately, management expects those tariff-related headwinds to lessen in the coming quarters. The company is on track to achieve its full-year guidance for net sales growth of 3% to 5% and earnings per share of $10.20 to $11.00.
Abercrombie & Fitch plans to pass much of these profits on to its investors via its sizable stock buyback program.
"We're tracking to another year of top-line growth, double-digit operating margins, expanding earnings per share, and strong cash flow, enabling us to target returning $450 million to shareholders this year via share repurchases," CEO Fran Horowitz said during a conference call with analysts.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Abercrombie & Fitch. The Motley Fool has a disclosure policy.