Abercrombie & Fitch lowered its annual net sales growth forecast on January 12, triggering a 16% decline in premarket trading. The company adjusted its full-year net sales growth target to at least 6%, down from a prior range of 6% to 7%. This tempered outlook reflects an estimated $90 million of tariff expense for fiscal 2025, equivalent to approximately 170 basis points of net sales, net of planned mitigation efforts.

Despite the revised annual forecast, both Hollister and Abercrombie segments delivered robust holiday results. Hollister achieved mid-teens percentage net sales growth through December, while Abercrombie Brands posted low single-digit growth on top of a record prior-year fourth quarter. Management attributed these gains to strong product assortments, targeted marketing and an omnichannel experience that resonated with younger consumers across North America, EMEA and APAC regions.

The company reaffirmed its commitment to record full-year net sales and operating margins around 13%, positioning it among the top-tier peers in specialty retail. Net income per diluted share is now expected between $10.30 and $10.40, up from a prior range of $10.20 to $10.50, reflecting a $39 million pre-tax benefit from a litigation settlement. Share repurchases remain targeted at approximately $450 million, supported by a diluted share count of roughly 48 million and capital expenditure guidance of about $245 million to strengthen digital, marketing and store initiatives.

For the fiscal fourth quarter, Abercrombie & Fitch forecasts net sales growth of around 5%, with operating margins near 14% and diluted EPS between $3.50 and $3.60. The company plans $100 million in share buybacks and anticipates opening about 40 net new stores while right-sizing or remodeling another 40 locations. Tariff impacts of approximately $90 million are built into these estimates, and the business will focus on expanding go-to-market partnerships and digital capabilities to drive sustainable, balanced growth.