Abercrombie & Fitch stock experienced a 15% increase on Wednesday after the retailer achieved better-than-expected quarterly earnings and increased its revenue projection although it reduced its full-year profit outlook because of tariffs.
The company reduced its fiscal 2025 earnings per share projection to a range of $9.50 to $10.50 instead of its previous forecast of $10.40 to $11.40. Operating margin projections were also trimmed to a range of 12.5% to 13.5% from the earlier 14% to 15% target.
The updated guidance includes financial impacts from the newly implemented tariffs which impose a 30% duty on Chinese imports and a 10% tariff on products from various other countries. The trade measures imposed by the government will result in a $50 million financial loss for Abercrombie.
The retailer achieved outstanding first-quarter financial results despite facing tariff-related challenges. The company achieved $1.59 earnings per share which surpassed the predicted $1.39 by analysts. The company exceeded revenue projections when it reported $1.10 billion compared to the expected $1.07 billion. The company earned $80.4 million in net income during the quarter but this was less than the $114 million earned during the previous year while sales increased by 8% from the previous year.
The company achieved its best first-quarter results in its entire history according to Abercrombie. The positive revenue outlook from the company boosted investor confidence because its stock price had declined by nearly 49% throughout the year.
The company demonstrates economic resistance through its robust top-line expansion despite facing margin pressure. The market showed appreciation for Abercrombie’s successful earnings beat and its positive outlook on its business strategy.
