Abercrombie & Fitch (ANF 1.51%), an apparel retailer known for its Abercrombie and Hollister brands, released Q2 FY2025 earnings on August 28, 2025. The company reported record net sales of $1.21 billion (GAAP), up 7.0% year-over-year, exceeding the company’s earlier projection of 3–5% net sales growth. Adjusted earnings per share (EPS) reached $2.32, above the high end of guidance but down from $2.50 in the prior period. The company’s operating margin (excluding a one-time settlement gain) was 13.9%, also coming in above the company’s prior 12–13% guidance range. Abercrombie & Fitch raised its full-year guidance for FY2025, highlighting exceptional performance by its Hollister brand and market strength in the Americas and Asia-Pacific regions.
| Metric | Q2 2025(Thirteen Weeks Ended August 2, 2025) | Q2 2024(Thirteen Weeks Ended August 3, 2024) | Y/Y Change |
|---|---|---|---|
| EPS (Non-GAAP) | $2.32 | $2.50 | (7.2%) |
| Revenue | $1.21 billion | $1.13 billion | 7.0 % |
| Operating Margin (Non-GAAP) | 13.9 % | 15.5 % | (1.6) pp |
| EPS (GAAP) | $2.91 | $2.50 | 16.4% |
| Net Cash Provided by Operating Activities | $112.9 million(Year-to-Date) | $260.1 million(Year-to-Date) | (56.6%) |
| Inventory | $593 million(As of August 2, 2025) | $540 million(As of August 3, 2024) | 9.8 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Inside Abercrombie & Fitch’s Business and Focus Areas
Abercrombie & Fitch is a global specialty retailer offering casual apparel and accessories under two main brands: Abercrombie and Hollister. The company increasingly drives sales through digital channels as part of its omnichannel retail strategy.
In recent years, it has invested in digital infrastructure and mobile platforms, aiming to create a seamless customer experience both online and in stores. Success factors for the business include strong brand differentiation, effective customer engagement through loyalty programs and influencer partnerships, and disciplined financial operations, especially inventory management and pricing strategies.
Quarter Highlights: Sales, Margins, Brands, and Regional Trends
Second quarter revenue (GAAP) reached a new record, fueled by the Hollister family of products for teens, which grew net sales by 19% year-over-year (GAAP). This was the best second quarter ever for the Hollister brand, amid high engagement for summer and back-to-school apparel. In contrast, Abercrombie brand sales declined 5%, as the company faced tough comparisons and challenges with some product launches and inventory mix. Comparable sales for the Abercrombie brand fell 11% year-over-year, underscoring persistent brand-specific pressure.
Geographically, the Americas continued as the engine of growth, with net sales up 8% year-over-year in the Americas and comparable sales up 5% year-over-year in the Americas. Asia-Pacific sales rose 12%, mainly from new store activity, with comparable sales increased 1% year-over-year in Asia-Pacific. The Europe, Middle East, and Africa region saw GAAP net sales decline 1% and comparable sales dropped 5% year-over-year in EMEA after previously positive momentum in the first quarter.
Profitability metrics were mixed. Operating margin before one-time items reached 13.9%, above the top end of the company’s guidance. However, this figure declined from 15.5% a year earlier as higher costs of goods sold, greater use of promotional activity to clear inventory, and elevated tariffs weighed on profitability. Adjusted net income declined, even as the company recognized a one-time $39 million litigation settlement, which temporarily boosted reported profit and GAAP EPS to $2.91.
Inventory (GAAP) rose by nearly 10% to $593 million as of Q2 FY2025, compared to $540 million a year earlier, surpassing the 7% year-over-year revenue growth. Management cited “progress on key inventory initiatives,” but the inventory build is a risk factor if demand weakens, as it could lead to markdowns. Cash and equivalents were down to $573 million compared to $738 million a year earlier and $773 million at the fiscal year start, a result of extensive share repurchase activity and capital expenditures.
The retailer continued to return cash to shareholders, executing $50 million in share buybacks during the quarter, contributing to a 7% reduction in shares outstanding year to date, prior to the vesting impact of stock compensation. Meanwhile, year-to-date net cash from operating activities (GAAP) was $112.9 million for the twenty-six weeks ended August 2, 2025, less than half the $260.1 million figure from the twenty-six weeks ended August 3, 2024, reflecting a combination of higher inventory levels and increased capital spending.
How Abercrombie & Fitch Makes Money and What Matters Going Forward
The company’s core business is selling branded clothing and accessories to young adults and teens through its Abercrombie and Hollister product families. Digital sales, in-store purchases, and international expansion all contribute to its revenue mix.
Key to business success is an effective omnichannel retail strategy, meaning a coordinated approach across e-commerce, mobile, and physical store channels. This is supported by investments in digital systems and store modernization. Building customer loyalty through engagement and targeted marketing, particularly to teenagers and young adults, is an ongoing focus. The business also monitors regional market trends, adapting its approach in areas like the Americas, EMEA, and APAC to capture growth where possible.
Looking Ahead: Guidance and Investor Watchpoints
The company raised its full-year outlook, now expecting net sales growth of 5–7% for FY2025, up from 3–6%. The updated operating margin range is 13.0–13.5% for FY2025, with the lower end of the range increased from prior guidance. Full-year diluted EPS guidance was also increased to $10.00–$10.50 for FY2025. For the upcoming third quarter, management guided to 5–7% net sales growth for the third quarter, 11–12% operating margin, and $2.05–$2.25 in diluted EPS. These projections for FY2025 factor in an estimated $90 million tariff cost (a significant increase from previous estimates), which will negatively impact profitability by approximately 1.7 percentage points.
For investors and followers, areas to watch include inventory trends versus future demand, continued progress in turning around the Abercrombie brand, and overall margin performance as cost pressures and promotional intensity persist. Execution in digital and omnichannel strategy, alongside regional and brand-level growth, will remain in focus as 2025 unfolds.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
