NEW YORK, Jan 12, 2026, 09:49 EST — Regular session
- Shares of Abercrombie & Fitch dropped roughly 20% following the company’s downgrade of its holiday-quarter guidance and adjustments to its full-year projections.
- The company highlighted increased planned spending and noted tariff costs factored into its revised outlook.
- Investors are turning to management’s conference calls for fresh insights on demand and margins ahead of the fiscal year-end.
Abercrombie & Fitch Co shares plunged Monday after the apparel retailer trimmed its Q4 outlook and cut the upper range of its full-year sales growth forecast post-holiday season. Early trading saw the stock drop roughly 20% to $99.62.
This shift is critical since the holiday quarter is prime time for many mall-based brands, and guidance changes tend to ripple quickly through the sector. Abercrombie has maintained solid margins, so expectations were already set high.
Tariffs are back on the radar as shoppers stay price-conscious. Investors aren’t just focused on holiday sales—they’re weighing the costs of holding shares and managing inventory.
Abercrombie trimmed its full-year net sales growth forecast to at least 6%, down from the previous 6% to 7% range, while holding its operating margin steady at around 13%, according to its latest business update. The retailer projects fourth-quarter net sales growth near 5% and earnings per share between $3.50 and $3.60. It also raised its capital expenditure target to roughly $245 million from $225 million. CEO Fran Horowitz highlighted a “record quarter-to-date net sales through fiscal December” alongside a “strong customer response” during the holiday season. The outlook factors in approximately $90 million in tariff expenses—about 170 basis points of sales after planned mitigation—and includes a gain from a litigation settlement. (GlobeNewswire)
Investors are digesting the gap between Abercrombie’s fourth-quarter sales forecast and Wall Street’s expectations. The company anticipates roughly 5% growth, trailing analysts’ 5.8% estimate, based on LSEG data. This shortfall weighed on other apparel stocks, as retailers flagged cautious spending in the wake of the holiday season. (Reuters)
Some details work both ways. Abercrombie held its share repurchase plans steady, yet rising capital expenditures could weigh on near-term free cash flow, even as they back stores, digital efforts, and marketing in the long run.
Traders are keeping an eye on whether Hollister’s gains can make up for a weaker close at Abercrombie. Promotions heading into year-end also remain under scrutiny. The tariff situation adds extra uncertainty: the company’s forecasts rely on policies from early January, so any changes could push costs up fast.
The update appeared in a regulatory filing, setting the fiscal year end on January 31, 2026. (SEC)
There’s a real risk on the downside. Should consumers keep cutting back or retailers push deeper discounts to move inventory, margins could shrink quickly. Higher tariffs would pile on more pressure, despite any mitigation efforts.
