Abercrombie & Fitch Stock Is Down 35%. Here’s Why Hollister Still Matters.
Abercrombie & Fitch (NYSE: ANF) has been a rough ride. The stock is down 35% in the past year, while the S&P 500 has climbed 17%. What’s dragging it lower? A mix of weak guidance, tariff worries, and patchy brand performance.
The problem sits squarely with the Abercrombie label. In Q2, sales there fell 5%, with comparable sales plunging 11%. Investors don’t like when a hot streak stalls, and last year’s surge has been tough to match. Meanwhile, the broader U.S. retail backdrop is holding up: July retail sales rose 0.5% month over month and 3.9% from last year. Not booming, but not falling apart either.
That said, for investors who seek lower volatility than individual stocks, the Trefis High Quality Portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
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Let’s get into the details of the assessed factors, but before that, for quick background: With $4.4 Bil in market cap, Abercrombie & Fitch provides specialty retail through two segments, operating around 729 stores globally across Europe, Asia, Canada, the Middle East, and the United States.
Hollister: The Real Engine
The Hollister brand crushed it, delivering a 19% sales jump—its best second quarter ever. Hollister now drives more than half the company’s revenue, pulling in $657 million versus $552 million for Abercrombie. Management even raised ANF’s full-year guidance to 5%–7% sales growth and bumped its EPS outlook to $10–$10.50.
How? Hollister is connecting with shoppers. Dresses and denim are moving. Y2K-inspired launches are hitting Gen Z and millennial nostalgia. And CEO Fran Horowitz isn’t shy: she credits the brand’s ability to pull in affluent female shoppers who are still spending, even as prices climb.
The Catch: Tariffs and Margins
The growth story isn’t free. Import duties from Vietnam, Cambodia, India, and China could hit $90 million this year. Margins already trail the market: ANF’s operating margin over the last four quarters is 14.2%, compared with 18.6% for the S&P 500. That gap matters.
And then there’s history. This is a stock that dropped 70% during the 2022 inflation shock and 83% in the 2008 financial crisis. It always claws back, but volatility is baked in.
Why Bother With ANF?
Because the fundamentals still look cheap. A P/E of 9.5 A P/S of 0.9. Revenue growth of more than 10% a year over the past three years. Add in a strong balance sheet—low debt, high cash—and ANF doesn’t look like a company in trouble. It looks like the market isn’t pricing it right.
A Smarter Way to Play the Market
Abercrombie & Fitch presents a mixed picture: Hollister’s record growth underscores the brand’s strength, while tariffs and weaker Abercrombie sales weigh on margins and sentiment. At current multiples, the stock appears undervalued, but it remains best suited for investors comfortable with retail cyclicality and higher volatility. That said, investing in a single stock carries inherent risks, and a diversified approach may offer more stability. You could explore the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.
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