Why Abercrombie & Fitch Stock Surged 35% Today
Key Points
New partnerships are accelerating Abercrombie & Fitch's sales growth.
Management plans to buy back $500 million worth of the company's stock in fiscal 2026.
Shares of Abercrombie & Fitch (NYSE: ANF) rocketed higher on Wednesday after the apparel and accessories purveyor boosted its full-year profit forecast.
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Consistent, broad-based growth
Abercrombie & Fitch's net sales rose 5% year over year to $1.3 billion in its fiscal 2026 second quarter, which ended on Aug. 1. That marked the retailer's 15th straight quarter of growth.
Abercrombie & Fitch saw gains in all its major geographic regions. Its Asia-Pacific segment enjoyed particularly strong growth, with sales up 19%.
The company's Abercrombie and Hollister brands both delivered record Q2 revenue, with sales up 8% and 2%, respectively.
Hollister struck a partnership with discount retail giant Target in June that launched it into the home and decor category.
"Hollister's collaboration with Target, the brand's first meaningful wholesale and category expansion in the U.S., has performed very well against expectations and added nicely to top-line growth this quarter," CEO Fran Horowitz said during a conference call with analysts.
These sales increases, along with roughly $100 million in tariff refunds, drove Abercrombie & Fitch's operating income to $253 million. Its adjusted earnings per share, in turn, climbed to $4.17 from $2.32 in the prior-year period.
Management chose to pass much of these profits on to stockholders via share repurchases. Abercrombie & Fitch has spent $282 million to buy back a whopping 7% of its shares so far in 2026.
Buybacks are set to continue
This solid first-half performance prompted the company to boost its full-year financial forecast. Management now sees net sales rising by 5%, resulting in net income of $13.10 to $13.60 per share.
"We expect to grow sales and earnings per share, underpinned by double-digit operating margins, while delivering strong cash flow and returns of cash to shareholders through at least $500 million of share repurchases," Horowitz said.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool recommends Abercrombie & Fitch. The Motley Fool has a disclosure policy.