What’s Happening With Abercrombie & Fitch Stock?

Abercrombie & Fitch’s (NYSE: ANF) Q1 results exceeded expectations on May 28, propelling shares 15% higher. The stock pulled back to $83 after the market opened on May 29, remaining 44% below its year-to-date peak and trailing the S&P 500’s 0.6% gain. This contrast highlights the company’s strong operational performance amidst macroeconomic headwinds, offset by investor caution over revised margin and earnings guidance for FY 2025.

Over the past three years, ANF stock has more than doubled—from about $35 in early 2022 to nearly $85 today—driven by a 155% surge in earnings per share, from $4.20 in 2021 to $10.69 in 2024. That momentum carried into Q1 FY25, where the company posted EPS of $1.59 on $1.10 billion in revenue, beating expectations of $1.39 and $1.07 billion, respectively. While earnings growth has been impressive, valuation multiples tell a more cautious story: the trailing P/E ratio expanded to 11x in 2024 but has since fallen back to 8x, despite stronger fundamentals—signaling investor concern over sustainability and external risks.

Image by Pexels from Pixabay

What Drove Abercrombie & Fitch’s Earnings Growth?

The company’s namesake brand’s comeback is no accident. The company revamped stores, broadened its appeal, and doubled down on digital and global growth. Abercrombie brand sales surged at an 18% CAGR from 2021 to 2024, outpacing the company’s 10% overall growth. Hollister posted an 8% CAGR, powered by Gen Z momentum and a stronger women’s lineup. Operating margins expanded sharply from 9.2% to 15.0%, while a 15% reduction in shares outstanding helped EPS skyrocket 155%, well ahead of revenue growth. See Abercrombie & Fitch’s Revenue.

However, Q1 results showed a mixed picture: Abercrombie brand sales declined 4%, with comps down 10% due to lower pricing and tough year-ago comparisons. Meanwhile, Hollister delivered its eighth straight quarter of strength—sales rose 22% with comps up 23%. Operating margin settled at 9.3%, below last year’s 12.7% but above expectations. Inventory rose 21% in value, positioning the company for a stronger second half.

Valuation Hit by 2025 Guidance, Tariff Risk

Full-year guidance was trimmed, with EPS now expected between $9.50 and $10.50 (down from $10.40 to $11.40) and operating margins cut to 12.5%–13.5% (from 14%–15%). The key drag: $50 million in tariff costs expected to shave 100 basis points off margins. With no planned broad price hikes and flat average unit retail outlook for the year, ANF forecasts 3%–6% net sales growth in 2025, with growth across all regions. Management is supporting shareholder returns through a $1.3 billion buyback plan, having repurchased $200 million in Q1 and with $1.1 billion remaining authorized.

Volatile History, Undervalued Potential?

ANF’s stock has swung wildly: +71% in 2021, -34% in 2022, +285% in 2023, and +69% in 2024. The steep 2025 decline signals investor skepticism amid macro risks and tariff pressures. Yet with a P/E at just 8x—well below the four-year average of 14x—and solid earnings power, the stock may offer significant upside if management navigates headwinds effectively. See our analysis on Abercrombie & Fitch’s Valuation for more details on what’s driving our price estimate for the stock.

Note: Investing in a single stock can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index, less of a roller-coaster ride as evident in HQ Portfolio performance metrics.

It should also be noted that stocks can drop sharply – 20%, 30%, even 50% –as we’ve seen during past market shocks. No stock is immune. Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.

Invest with Trefis Market-Beating Portfolios
See all Trefis Price Estimates