Abercrombie & Fitch Co. — Second Quarter Fiscal 2026 Earnings Summary

Financial Performance

• Net sales reached a record $1.3 billion for the quarter, a 5% increase year-over-year, marking the 15th consecutive quarter of growth.
• Operating income was $253 million, including approximately $100 million in IEEPA tariff refunds, compared to $207 million (reported) and $168 million (adjusted non-GAAP) in the prior year.
• Operating margin was 20% (19.9% reported), an increase from 17.1% (reported) and 13.9% (adjusted non-GAAP) in the prior year.
• Net income per diluted share was $4.17, compared to $2.91 (reported) and $2.32 (adjusted non-GAAP) in the prior year.
• Year-to-date net cash provided by operating activities was $313 million.
• Year-to-date net cash used for investing activities was $114 million, primarily for capital expenditures.
• Year-to-date net cash used for financing activities was $330 million, primarily for share repurchases.
• Cash and equivalents were $628 million as of August 1, 2026, down from $760 million at the start of the fiscal year.
• Total liquidity (cash and equivalents plus borrowing availability) was approximately $1.1 billion as of August 1, 2026.
• Depreciation and amortization for the year-to-date period was $86 million.

Guidance and Future Outlook

• Updated full-year fiscal 2026 net sales growth outlook to around 5%, up from a previous range of 3% to 5%.
• Updated full-year fiscal 2026 net income per diluted share outlook to $13.10 to $13.60, up from $10.20 to $11.00.
• Updated full-year fiscal 2026 operating margin outlook to 14.5% to 15.0%, up from 12.0% to 12.5%.
• Updated full-year fiscal 2026 share repurchase commitment to at least $500 million, up from around $450 million.
• Third quarter fiscal 2026 net sales growth outlook is 5% to 6%.
• Third quarter fiscal 2026 net income per diluted share outlook is $2.90 to $3.20.
• Third quarter fiscal 2026 operating margin outlook is 13.0% to 14.0%.
• Third quarter fiscal 2026 share repurchase commitment is at least $100 million.
• Full-year fiscal 2026 effective tax rate outlook is around 29%, down from around 30%.
• Full-year fiscal 2026 capital expenditures outlook is around $250 million, up from around $225 million.
• Full-year fiscal 2026 real estate activity includes approximately 30 net store openings (50 openings, 20 closures) and 80 remodels/right-sizes.

Business Segments and Product Lines

• Americas net sales grew 5% year-over-year, with comparable sales up 1%.
• APAC net sales grew 19% year-over-year, with comparable sales up 13%.
• EMEA net sales grew 2% year-over-year, with comparable sales down 4%.
• Abercrombie brands net sales grew 8% year-over-year, with comparable sales up 4%.
• Hollister net sales grew 2% year-over-year, with comparable sales down 3%.
• Both brands achieved record second quarter net sales.
• Growth was balanced across brands and regions, with accelerating momentum in the Americas and improving trends in EMEA.

Market and Competitive Landscape

• The company operates approximately 850 stores across North America, Europe, Asia, and the Middle East.
• The company operates e-commerce sites including abercrombie.com, abercrombiekids.com, and HollisterCo.com.
• Management noted the company is adding incremental growth levers across partnerships, distribution channels, and product categories.

Risks and Challenges

• Risks include global trade policy and international trade disputes, specifically the imposition, threat, or modification of tariffs and uncertainty regarding tariff refunds.
• Risks related to global economic conditions, inflation, and consumer confidence and spending.
• Risks related to the effectiveness and optimization of recently implemented enterprise resource planning (ERP) systems.
• Risks related to global operations and supply chain, including political or climate-related conditions, transportation, and freight costs.
• Risks related to geopolitical landscape, armed conflicts, and social unrest.
• Risks related to the ability to engage customers, anticipate demand, and manage inventory and product delivery.
• Risks related to cybersecurity threats and data security breaches.
• Risks related to the validity of trademarks and protection of intellectual property.
• Risks related to adverse public health developments and climate change.

Management Commentary and Tone

• CEO Fran Horowitz stated the company delivered record second quarter net sales and the 15th consecutive quarter of growth.
• Management expressed confidence in the long-term growth path and investment priorities.
• Management highlighted the use of a strong balance sheet to invest in stores, digital, technology, and marketing while repurchasing shares.
• Management noted excitement about the foundation built and significant growth opportunities ahead to strengthen brands and create shareholder value.
• Management confirmed that operating margin and earnings per diluted share were above outlook, in excess of the tariff refund benefit.

Other Key Points

• The company repurchased $177 million in shares during the second quarter (2.0 million shares).
• Year-to-date share repurchases totaled $282 million (3.2 million shares), representing a 7% reduction in shares outstanding from the beginning of the year.
• $568 million remains on the share repurchase authorization established in March 2025.
• A favorable settlement, net of legal fees, of payment card interchange fee litigation was recorded in the prior year but excluded from the current year's adjusted non-GAAP results.
• IEEPA tariff refunds of approximately $100 million on a pre-tax basis and $1.75 per diluted share were recognized in the second quarter.
• The company has a senior-secured asset-based revolving credit facility (ABL Facility) with $500 million borrowing capacity and $450 million net borrowing available as of August 1, 2026.
• Inventories were $592 million as of August 1, 2026.
• A conference call regarding the results and outlook was scheduled for August 26, 2026, at 8:30 a.m. ET.