MW Why Abercrombie's stock took a dive after just a slight tweak to the earnings outlook
By Tomi Kilgore
Guidance range for earnings was narrowed but essentially kept intact, while the sales growth outlook was lowered slightly
Abercrombie & Fitch's stock gets punished for a slight tweak in its sales growth outlook, just after it logged its best two-month gain in 25 years.
Shares of Abercrombie & Fitch were having their worst day in more than three years on Monday, as the apparel retailer's updated outlook for fourth-quarter earnings, in which the profit outlook was kept essentially intact, seemed to get a rather harsh treatment from investors.
The stock's $(ANF)$ sell-off comes after the stock just booked its best two-month run in 25 years, as the company touted continued strength in Hollister-brand sales and raised its full-year outlook off a two-year low.
The company said Monday that it now expects earnings per share of $10.30 to $10.40 for the full fiscal year. That's narrower than the previous guidance of $10.20 to $10.50, but the midpoint of the outlook remains the same, and it's still well above the average analyst EPS estimate compiled by FactSet of $9.83.
But the company said overall net sales for the year are expected to be up "at least" 6% from a year ago, which marks a slight dip from previous guidance of 6% to 7%.
The stock tumbled 16.8% in recent morning trading, putting it on track for the biggest one-day selloff since it sank 17% on Aug. 28, 2024.
While the stock's selloff might seem like an overreaction to that actual news, since that news also includes a bump up in the sales outlook for the Abercrombie brand, it does follow a historically sharp climb.
Highlighted by the record one-day rally of 37.5% on Nov. 25 - after the latest quarterly results were reported - the stock rocketed 73.5% in the November-December period. That was the best two-month performance for the stock since it soared 90.3% for the two months ending August 2020.
The stock has now retraced about 40% of the rally from the two-year closing low of $65.61 hit on Nov. 24 to the one-year closing high of $129.85 on Jan. 8.
For the fourth quarter, net sales were expected to show growth of around 5%, the company said, compared with a previous outlook of growth in the range of 4% to 6%.
And following a strong holiday period, the company expects Abercrombie brand sales to be up in the low-single-digit percentage range, which is better than the previous target of "approximately flat" sales growth. That would snap a three-quarter streak of year-over-year declines.
Hollister sales are expected to post another year of sales growth in the mid-teens percentage.
Abercrombie's stock has dropped 35.5% over the past 12 months, while the State Street SPDR S&P Retail ETF XRT has gained 13.7% and the S&P 500 index SPX has advanced 19.6%.
-Tomi Kilgore
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 12, 2026 12:02 ET (17:02 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments