Abercrombie Shifts Strategy: Can It Win Over A New Generation Worldwide?

JPMorgan hosted Abercrombie & Fitch (NYSE:ANF) CEO Fran Horowitz, COO Scott Lipesky, CFO Robert Ball, and VP of Investor Relations Mo Gupta for investor meetings.

Analyst Matthew Boss says that CEO Horowitz sees ANF "beginning the next chapter of diversified & agnostic revenue growth" focused on driving the lifetime value of customers.

In May, the retailer reported first-quarter adjusted EPS of $1.59, beating the street estimate of $1.40, and sales of $1.1 billion outpaced the analyst consensus estimate of $1.08 billion.

Abercrombie & Fitch revised FY25 guidance for net sales growth to 3% to 6% (from 3% to 5% prior) and EPS to $9.50 to $10.50 (from $10.40 to $11.40) vs. street view of $10.75.

Also Read: Abercrombie & Fitch Absorbs Tariff Impact, No Price Hike Despite $50 Million Cost: Plans To Open 100 New ‘Physical Experiences’ In 2025

Despite mitigation efforts, the full-year outlook includes an estimated $50 million (100 basis points of net sales) in tariff expenses.

Boss writes that following marketing and merchandising improvements over the last few years, the Abercrombie brand has successfully expanded its customer reach to an 18 to 40-year-old demographic.

Substantial new customer acquisition globally supports broad-based top-line results and greater full-price selling.

The analyst also sees international brand growth picking up, with about $400 million in revenue still to be regained compared to pre-pandemic levels. Over the long term, Boss expects steady annual growth in profit margins, helped by lower occupancy costs and a stronger overall profit margin than before the pandemic.

The management noted traffic and new customer growth to the Abercrombie brand, which stands "nicely" positive year over year, with customers responding well to the Vacation Shop.

The analyst on Monday maintained an Overweight rating and a price target of $141, down from $147, based on around 7x the estimated fiscal 2026 EBITDA.

Management said that about 50% of their inventory budget for the second half of 2025 is still available. They plan to keep things flexible to respond quickly to strong-performing product categories during the Fall season.

Boss said the company's management sees strong international growth potential across both brands. Currently, international sales make up about 19% of total sales, compared to around 35% in the past.

Management highlighted solid performance in early expansion markets like Germany and the UK and sees more room to grow. Most current international sales come from the Hollister brand, suggesting a significant opportunity for the Abercrombie brand to expand and gain market share overseas.

Price Action: ANF stock is up 0.5% at $75.06 at the last check on Monday.

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