Abercrombie & Fitch Faces Stock Decline Following Tepid 2025 Sales Forecast

The retailer cites tariffs, higher freight costs, and softer consumer demand as key challenges impacting its outlook.

Abercrombie & Fitch lowered its 2025 sales growth forecast to 3%-5%, below analysts' expectations of 6.77%, signaling a slowdown from 2024's 14% growth.
The company anticipates operating margins of 14%-15% for 2025, with the first half impacted by higher freight costs and inventory adjustments, and the second half benefiting from lower freight expenses.
Newly announced tariffs on imports from China, Canada, and Mexico are expected to reduce operating margin by $5 million, with further potential tariff impacts unaccounted for in the guidance.
While Hollister brand sales rose 16% in the holiday quarter, Abercrombie's namesake brand showed weaker performance, with analysts expressing concern over its future growth prospects.
Abercrombie plans to open 100 new stores in 2025 and has implemented a $1.3 billion stock buyback program despite inventory increases and investor concerns over demand challenges.