Abercrombie & Fitch’s modest reduction in its annual net sales growth forecast—from a previously projected range of 6%–7% to a floor of 6%—prompted a 16% plunge in premarket trading. Investors had bid the stock up over 25% in the prior two months, a 25-year high for a two-month gain, and viewed even a minor downward adjustment as a sign the retailer’s momentum could be slowing after record quarter-to-date December net sales.

Both the Hollister and Abercrombie brands delivered robust holiday results, with Hollister achieving mid-teens net sales growth year-over-year and Abercrombie growing low single-digit net sales on top of last year’s record quarter. Despite these gains, management narrowed fourth-quarter net sales guidance to around 5% growth (previously 4%–6%) and trimmed the annual net income per diluted share outlook to $10.30–$10.40 from $10.20–$10.50, signaling caution heading into the critical spring season.

For the full year, A&F reiterated its goal of at least 6% net sales growth and around 13% operating margin, down marginally from the prior 13.0%–13.5% range. The company affirmed plans for $450 million in share repurchases and forecast capital expenditures rising to approximately $245 million, up from $225 million, driven by investments in digital platforms, marketing and store remodels. The slight conservatism in earnings-per-share guidance reflects a $39 million litigation settlement benefit baked into prior estimates.

The current outlook incorporates roughly $90 million of tariff expense, or 170 basis points of net sales, associated with existing U.S. trade policies. Management highlighted ongoing mitigation efforts but warned that any additional measures could pressure margins further. A&F plans to discuss these sensitivities and its global expansion strategy—including about 40 net new store openings and 40 remodels—in meetings at the upcoming 2026 ICR Conference on January 12–13.