Jamie Spencer
Add Abercrombie & Fitch (ANF) to the growing list of American retailers facing investor backlash over concerns about the looming impact of Trump tariffs.
Market Reaction
Abercrombie & Fitch stock tumbled more than 16% in early trading on Wednesday after reporting slightly weaker-than-expected holiday quarter sales at its namesake division. However, what unsettled investors the most was the company’s cautious 2025 guidance, which projected slowing sales growth and operating margin expansion.
The company warned that up to 100 basis points of year-over-year margin pressure could stem from the anticipated impact of new tariffs imposed by the Trump administration.
Tariff Impact and Supply Chain Adjustments
“The outlook for operating margin includes estimated impact from the tariffs announced in February 2025 on goods imported from China, Mexico, and Canada into the United States. It does not include impacts related to other potential future policy or legislative changes, additional potential tariffs imposed by the United States, or potential tariffs imposed by countries other than the United States,” Abercrombie stated in small print within its earnings guidance.
Abercrombie & Fitch CEO Fran Horowitz had previously mentioned that 5% to 6% of the company’s U.S. receipts in 2024 would come from China. She noted that Abercrombie was actively working to adjust its supply chain to mitigate tariff-related pressures.
Following the Trend of Cautious Retail Guidance
ANF’s warning follows similar cautious guidance from other major retailers, including Target (TGT) and Best Buy (BBY), both of which also saw sharp declines in their stock prices after expressing concerns over the impact of tariffs.
Abercrombie & Fitch Q4 Earnings Breakdown
- Net Sales: +9% year over year to $1.58 billion (vs. $1.57 billion estimate)
- Comparable Sales: +14% (vs. +11.5% estimate)
- Abercrombie & Fitch Division Sales: $772.7 million, +2% year over year (vs. $807.5 million estimate)
- Hollister Division Sales: $812.2 million, +16% year over year (vs. $758 million estimate)
- Adjusted Diluted EPS: +20% year over year to $3.57 (vs. $3.54 estimate)
2025 Growth Slowdown Projections
Abercrombie & Fitch’s outlook for 2025 reflects a significant slowdown compared to 2024:
- Net Sales Growth: +3% to +5% (vs. +16% in 2024)
- Operating Margin: Expected between 14% to 15% (vs. 15% in 2024)
Navigating a Challenging Retail Landscape
Abercrombie & Fitch’s stock plunge highlights Wall Street’s concerns over the retailer’s ability to navigate rising tariffs and a slowing growth outlook. With supply chain adjustments in progress and further tariff uncertainties looming, the company, along with other major retailers, faces a challenging road ahead.
