Abercrombie & Fitch Surges 37% After Record Q2 Sales, $100M Tariff Refund Drives Massive Earnings Beat and Raised Outlook

Abercrombie & Fitch shares rocketed roughly 37% to around $148-$149 on Wednesday, hitting an 18-month high, after the retailer posted record second-quarter net sales of $1.27 billion, up 5% year-over-year and ahead of the $1.25 billion analyst consensus. Adjusted earnings per share came in at $4.17, more than doubling the $1.99 estimate and including a $1.75-per-share benefit from approximately $100 million in pre-tax tariff refunds received under the International Emergency Economic Powers Act. That refund alone added 790 basis points to operating margin, which expanded to 19.9%, up 280 basis points from a year earlier, with operating income of $253 million and EBITDA of $296 million against an estimate of $170 million.

The Abercrombie brand grew sales 8% to $596.8 million while Hollister rose 2% to $669.9 million. By region, Americas revenue rose 5% to $1.0 billion, EMEA gained 2% to $202 million, and APAC surged 19% to $44.2 million, though comparable sales were flat overall. The quarter marked the company's 15th consecutive period of sales growth.

For full-year fiscal 2026, management raised EPS guidance to $13.10-$13.60, up sharply from the prior $10.20-$11.00 range and well above the Street's $10.72 estimate, with the increase reflecting both the tariff refund and underlying operational momentum. Net sales growth guidance was tightened upward to approximately 5% from 3%-5%, and operating margin guidance was raised to 14.5%-15.0% from 12.0%-12.5%. The share buyback target was lifted to at least $500 million from roughly $450 million, with $568 million of authorization remaining after repurchasing 2.0 million shares for about $177 million in the quarter.

For the third quarter, the company guided EPS of $2.90-$3.20 against an estimate of $2.84, net sales growth of 5%-6%, operating margin of 13.0%-14.0%, and an additional $20 million in tariff refunds. CEO Fran Horowitz noted Hollister's back-to-school momentum was building as the company exited Q2, and highlighted the company's new role as the official fashion partner of the NFL for the 2026 season. BTIG raised its price target following results, and peer American Eagle Outfitters also moved higher on the earnings halo effect.