Abercrombie & Fitch (ANF) is trading with notable volatility today after reporting first-quarter results that outpaced expectations but included a lowered full-year profit outlook due to rising tariff pressures. The specialty-apparel retailer posted adjusted EPS of $1.59, well above the $1.36–$1.41 range analysts forecast, on record net sales of $1.10 billion versus projections near $1.06 billion‍. Yet, management trimmed its FY25 EPS guidance by roughly $0.90 at the midpoint to $9.50–$10.50 (from $10.40–$11.40), citing an anticipated $50 million headwind from tariffs, primarily on Chinese-sourced merchandise.

Comparable-store sales rose 4 % overall, comfortably ahead of the 2.3 % consensus.

• Hollister was the star, with comps up 22–23 %, driven by strong demand for new denim and seasonal assortments.
• Abercrombie brand comps declined 4–10 % as it cycles tougher prior-year comparisons‍.

Geographic performance was broadly positive:

• EMEA led with a 12 % comp gain as European markets benefited from refreshed store layouts.
• The Americas and Asia Pacific markets each delivered mid-single-digit comp growth.

Margin pressures stem from:

• Tariffs: A 30 % levy on Chinese imports is expected to cost roughly $50 million this year.
• Freight & logistics: Elevated ocean-freight rates and inventory repositioning added another 1–2 pp drag on gross margin.

Q2 guidance:

• Net sales growth of 3–5 %, slightly below the 4.1 % Street estimate.
• Adjusted EPS of $2.10–$2.30, versus a consensus of $2.56, reflecting continued margin headwinds.

Inventory & cash flow:

• Inventory ended the quarter flat year-over-year, indicating tight stock management despite strong demand.
• Cash and equivalents rose to $1.2 billion, bolstering financial flexibility for marketing and share repurchases.

CFO Robert Ball emphasized that tariffs are “embedded in our assumptions” and that the team has reshaped its supply chain to diversify away from China over the next 12–18 months. The company also reiterated its multiyear target of mid-teens operating margins, suggesting aggressive expense control and pricing actions will be key to offset cost pressures. While the EPS beat and robust Hollister performance underscore the brand’s resilience, the EPS guidance cut and tariff headwinds introduce uncertainty. Investors will watch Q2 execution closely, particularly the rollout of higher price points and continued shift in sourcing. Over the near term, ANF’s ability to navigate trade-policy risks and sustain comp-store momentum will determine if today’s pullback sets up a buying opportunity or signals deeper margin erosion ahead.