Results

Abercrombie & Fitch Co.

06/05/2026 | Press release | Distributed by Public on 06/05/2026 14:37

Quarterly Report for Quarter Ending May 2, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read together with the Company's Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q in "Item 1. Financial Statements (Unaudited)," to which all references to Notes in MD&A are made.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Company cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this Quarterly Report on Form 10-Q or made by the Company or its management and authorized spokespeople involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the Company's and management's control. Words such as "estimate," "project," "plan," "believe," "expect," "anticipate," "intend," "should," "are confident," "will," "could," "outlook," or the negative versions of those words or other comparable words, and similar expressions may identify forward-looking statements. Future economic and industry trends that could potentially impact revenue and profitability are difficult to predict. Therefore, there can be no assurance that the forward-looking statements included in this Quarterly Report on Form 10-Q will prove to be accurate. Factors that could cause results to differ from those expressed in the Company's forward-looking statements include, but are not limited to, the risks described or referenced in Part I, Item 1A. "Risk Factors," in the Company's Fiscal 2025 Form 10-K and otherwise in our subsequent reports and filings with the SEC, as well as the following:
•risks and uncertainties related to global trade policy and international trade disputes, including the impact of the imposition or threat of imposition of new or increased tariffs or modification of existing tariffs by the United States or foreign governments, uncertainty regarding the timing and implementation of changes to existing tariff programs, the availability, timing, and amount of potential tariff refunds, or other changes to trade policies or arrangements;
•risks related to changes in global economic and financial conditions, including inflation, and resulting impacts on consumer confidence and spending, and on our operating results, financial condition, and expense management;
•risks and uncertainties related to the effectiveness and optimization of recently implemented enterprise resource planning ("ERP") systems, including the ability to realize expected benefits and manage post-implementation activities;
•risks related to our global operations and supply chain, including political or climate-related conditions in the countries where we sell or source our products, and the resulting impacts on transportation and freight costs;
•risks related to the geopolitical landscape and ongoing armed conflicts, acts of terrorism, mass casualty events, social unrest, civil disturbance or disobedience, including regional conflicts in the Middle East, and the impact of such conflicts or events on international trade, consumer demand, supplier delivery, energy costs, or freight costs;
•risks related to natural disasters and other unforeseen catastrophic events;
•risks related to our failure to engage our customers, anticipate customer demand, expectations, and changing fashion trends, and manage our inventory and product delivery;
•risks related to our failure to operate effectively in a highly competitive and constantly evolving industry;
•risks related to our ability to successfully invest in and execute on our customer, digital and omnichannel initiatives;
•risks related to our ability to successfully execute technology initiatives and partnerships, including those relating to artificial intelligence ("AI") technology;
•risks related to our ability to execute on, and maintain the success of, our current or any future strategic and growth initiatives, including risks related to the review of strategic alternatives for our APAC business;
•risks related to the effects of seasonal fluctuations on our sales and our performance during the back-to-school and holiday selling seasons;
•risks related to fluctuations in foreign currency exchange rates;
•risks related to fluctuations in our tax obligations and effective tax rate, including as a result of earnings and losses generated from our global operations, may result in volatility in our results of operations;
•risks and uncertainty related to adverse public health developments;
•risks related to cybersecurity threats and privacy or data security breaches, and the potential loss or disruption of our information technology systems;
•risks related to the continued validity of our trademarks and our ability to protect our intellectual property;
•risks associated with corporate responsibility, including those associated with climate change;
•risks related to reputational harm to the Company, its officers, and directors;
•risks related to actual or threatened litigation; and
•uncertainties related to future legislation, regulatory reform, policy changes, or interpretive guidance on existing laws and regulations.
Abercrombie & Fitch Co.
2026 1Q Form 10-Q
In light of the significant uncertainties in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company, or any other person, that the objectives of the Company will be achieved. The forward-looking statements included herein are based on information presently available to the management of the Company. Except as may be required by applicable law, the Company assumes no obligation to publicly update or revise its forward-looking statements, including any financial targets and estimates, whether as a result of new information, future events, or otherwise. As used herein, "Abercrombie & Fitch Co.," "A&F," "the Company," "we," "us," "our," and similar terms include Abercrombie & Fitch Co. and its subsidiaries, unless the context indicates otherwise.
INTRODUCTION
MD&A is provided as a supplement to the accompanying Condensed Consolidated Financial Statements and notes thereto to help provide an understanding of the Company's results of operations, financial condition, and liquidity. MD&A is organized as follows:
•Overview. A general description of the Company's business and certain segment information.
•Current Trends and Outlook. A discussion related to certain of the Company's focus areas for the current fiscal year and a discussion of certain risks and challenges, as well as a summary of the Company's performance for the thirteen weeks ended May 2, 2026 and May 3, 2025.
•Results of Operations. An analysis of certain components of the Company's Condensed Consolidated Statements of Operations and Comprehensive Income for the thirteen weeks ended May 2, 2026 and May 3, 2025.
•Liquidity and Capital Resources. A discussion of the Company's financial condition, changes in financial condition and liquidity as of May 2, 2026, which includes (i) an analysis of financial condition as compared to January 31, 2026; (ii) an analysis of changes in cash flows for the thirteen weeks ended May 2, 2026, as compared to the thirteen weeks ended May 3, 2025; and (iii) an analysis of liquidity, including availability under the Company's ABL Facility (as defined below), the Company's share repurchase program, and covenant compliance.
•Recent Accounting Pronouncements. A discussion, as applicable, of the recent accounting pronouncements that the Company has adopted or is currently evaluating, including the dates of adoption and/or expected dates of adoption, and their anticipated effects on the Company's Condensed Consolidated Financial Statements.
•Critical Accounting Estimates. A discussion of the accounting estimates considered to be important to the Company's results of operations and financial condition, which typically require significant judgment and estimation on the part of management in their application.
•Non-GAAP Financial Measures. MD&A provides a discussion of certain financial measures that have been determined to not be presented in accordance with GAAP. This section includes certain reconciliations between GAAP and non-GAAP financial measures and additional details on non-GAAP financial measures, including information as to why the Company believes that the non-GAAP financial measures provided within MD&A are useful to investors.
Abercrombie & Fitch Co.
2026 1Q Form 10-Q
OVERVIEW
Business summary
The Company is a global, digitally-led omnichannel retailer. The Company offers a broad assortment of apparel, personal care products and accessories for men, women and kids, which are sold primarily through its Company-owned stores and digital channels, as well as through various third-party arrangements.
The Company manages its business on a geographic basis, consisting of three reportable segments: Americas; Europe, the Middle East and Africa ("EMEA"); and Asia-Pacific ("APAC"). Corporate functions and other income and expenses are evaluated on a consolidated basis and are not allocated to the Company's segments, and therefore are included as a reconciling item between segment and total operating income.
The Company's brand families include Abercrombie brands and Hollister brands. These brands share a commitment to offering unique products of enduring quality and exceptional comfort that allow customers around the world to express their own individuality and style.
The Company's fiscal year ends on the Saturday closest to January 31. All references herein to the Company's fiscal years are as follows:
Fiscal year Year ended/ending Number of weeks
Fiscal 2025 January 31, 2026 52
Fiscal 2026 January 30, 2027 52
Fiscal 2027 January 29, 2028 52
Seasonality
Historically, the Company's operations have been seasonal in nature and consist of two principal selling seasons: the spring season, which includes the first and second fiscal quarters ("Spring"), and the fall season, which includes the third and fourth fiscal quarters ("Fall"). Due to the seasonal nature of the retail apparel industry, the results of operations for any current period are not necessarily indicative of the results expected for the full fiscal year, and the Company could have significant fluctuations in certain asset and liability accounts. The Company historically experiences its greatest sales activity during the Fall season due to back-to-school and holiday sales periods, respectively.
CURRENT TRENDS AND OUTLOOK
Focus areas for Fiscal 2026
Over the last several years, A&F has worked to successfully transform its brands, business and culture, while delivering on its financial commitments. As the Company looks forward, it is focused on evaluating opportunities that continue to deliver sustainable, profitable growth. The Company expects to:
•Deliver Consistent Global Growth Across Brands by investing in owned-and-operated channels with the expectation of continued net sales growth, including through net new store openings, digital fulfillment, and marketing
•Expand Channels and Categories by increasing net sales growth in new and select markets through the use of franchise, wholesale, and licensing partnerships. The Company also plans to expand into new, adjacent product categories that resonate with each brand's target customer.
•Execute a Multifaceted Strategy that includes evaluating sourcing footprint, adjusting pricing or promotions, and expense reduction initiatives to stabilize product and operating costs in attempt to meaningfully mitigate external cost pressure, including near-term tariff impacts.
•Enhance and Modernize our Key Systems and Leverage Technology to support operational productivity and to improve the customer journey.
•Execute Financial Discipline to maintain double-digit operating margins and expand net income per diluted share.
Tariffs
Changes in trade policy and related uncertainty, including enacted and proposed tariffs affecting countries from which we source a significant portion of our merchandise, have resulted in a dynamic and unpredictable trade environment that has adversely impacted our business and operations. These impacts include volatility in duties on merchandise sourced from impacted countries and added complexity to our supply chain and sourcing processes.
While certain tariffs have been struck down, modified, or replaced, other tariffs have subsequently been imposed or proposed, including the imposition of a temporary 10% global tariff pursuant to Section 122 of the Trade Act of 1974 through July 24, 2026. Additional, increased, or modified tariffs may be imposed without warning through various statutes and trade authorities, which could lead to weakened business conditions for our industry and could result in increases to the cost of merchandise sourced
Abercrombie & Fitch Co.
2026 1Q Form 10-Q
from impacted countries.
Following the February 2026 U.S. Supreme Court decision invalidating certain tariffs imposed under IEEPA, the Company applied for refunds of IEEPA tariffs previously paid; however the timing, approval, and amount of such refunds ultimately received remains uncertain. As of May 2, 2026, the Company had not recognized any refunds of IEEPA tariffs.
Based on current assumptions regarding tariffs on goods imported into the U.S., including the impact of a 10% tariff rate for the fiscal second quarter and a 15% tariff rate thereafter for the remainder of Fiscal 2026, factoring in certain planned mitigation strategies and excluding any refunds of IEEPA tariffs, we expect to incur approximately $10 million of incremental impact, or approximately 20 basis points as a percentage of net sales, compared to Fiscal 2025, which would negatively impact our operating income during Fiscal 2026.
The Company continues to evaluate the impact of tariffs and other trade policies on its business and is executing against our playbook of mitigation strategies, which includes evaluating supply chain footprint changes, supply chain vendor negotiations, pursuing operating expense reductions, and determining ways to increase average unit retail ("AUR").
Current macroeconomic conditions and global events
Macroeconomic conditions such as a volatile interest rate environment, ongoing inflation, the geopolitical landscape, and foreign exchange rate fluctuations, continue to impact the global economy. Recently, the global markets have experienced fluctuations in fuel and other energy related costs, which could lead to greater uncertainty regarding the overall economic environment and consumer spending. During periods of perceived or actual unfavorable economic conditions, consumers may reallocate available discretionary spending or determine that they have fewer funds available for discretionary spending, which may also adversely impact demand for our products. Continued inflationary pressures could further impact expenses and have a longer-term impact on our ability to maintain satisfactory margins.
In addition, as a global multi-brand omnichannel specialty retailer, with operations in North America, Europe, the Middle East, and Asia, among other regions, we are exposed to global events and geopolitical developments, including armed conflicts in certain regions, that may adversely impact our operations and consumer demand in affected markets. For example, armed conflicts in the Middle East have disrupted, and may continue to affect, consumer demand patterns in affected markets. Management continues to monitor global events and assess the potential impacts that these and similar events may have on the business in future periods. Although management also develops and updates contingency plans to assist in mitigating potential impacts, it is possible that the Company's preparations for such events are not adequate to mitigate their impact, and that these events could further adversely affect its business and results of operations.
Supply chain disruptions
Global supply chain conditions continue to be affected by disruptions in major maritime routes, higher transportation and logistics costs, and increased competition for supply chain capacity due to uncertainty in the global trade environment and ongoing armed conflicts. For example, armed conflicts in the Middle East have contributed to elevated freight rates and longer transit times compared to historical levels, and prolonged or escalating conflicts could result in additional supply chain disruption, including higher energy and transportation costs (such as fuel related charges), shipping delays, or increased costs from using air freight instead of ocean freight to mitigate inventory delays.
Store Count
As of May 2, 2026, the Company operated 834 retail stores and the Company's franchisees operated 62 franchise stores across the Company's regions and brands as detailed in the table below.
Americas
EMEA
APAC
Total
Company-owned
Abercrombie
240 38 31 309
Hollister
399 101 25 525
Company-owned total
639 139 56 834
Franchise
Abercrombie 21 9 8 38
Hollister 10 10 4 24
Franchise total
31 19 12 62
Total
670 158 68 896
For Company-owned gross square footage by geographic region and brand as of January 31, 2026, and February 1, 2025, refer to "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" included in the Fiscal 2025 Form 10-K.
Abercrombie & Fitch Co.
2026 1Q Form 10-Q
Global store network modernization and growth
The Company has a goal of finding the right size, right location and right economics for omni-enabled stores that cater to local customers. The Company continues to use data to inform its focus on aligning store square footage with digital penetration, and has delivered new store experiences across brands during Fiscal 2026.
Through the end of the first fiscal quarter, the Company opened six new stores, remodeled 24 stores and right-sized two stores, while closing one store. As part of this focus, the Company's store investment plan includes delivering approximately 30 net store openings during Fiscal 2026 consisting of opening approximately 50 new stores, while closing approximately 20 stores, pending negotiations with our landlord partners. Additionally, the Company expects approximately 80 remodels and right-sizes during Fiscal 2026, pending negotiations with our landlord partners.
Future closures could be completed through natural lease expirations, while certain other leases include early termination options that can be exercised under specific conditions. The Company may also elect to exit or modify other leases, and could incur charges related to these actions.
For a discussion of material risks that have the potential to cause our actual results to differ materially from our expectations, refer to Part I, "Item 1A. Risk Factors" on the Fiscal 2025 Form 10-K.
Summary of results
The following provides a summary of results for the thirteen weeks ended May 2, 2026 and May 3, 2025:
GAAP
Non-GAAP (1)
Thirteen Weeks Ended
May 2, 2026
May 3, 2025
May 2, 2026
May 3, 2025
Net sales (in thousands)
$ 1,113,821 $ 1,097,311
Change in net sales 2 % 8 %
Comparable sales (2)
(1) % 4 %
Operating income (in thousands)
$ 88,797 $ 101,533
Operating income margin
8.0 % 9.3 %
Net income attributable to A&F (in thousands)
$ 67,134 $ 80,413
Net income per diluted share attributable to A&F
1.47 1.59
(1)Discussion as to why the Company believes that these non-GAAP financial measures are useful to investors and a reconciliation of the non-GAAP measures to the most directly comparable financial measure calculated and presented in accordance with GAAP are provided below under "NON-GAAP FINANCIAL MEASURES."
(2)Comparable sales are calculated on a constant currency basis and exclude revenue other than store and digital sales. Refer to the discussion below in "NON-GAAP FINANCIAL MEASURES," for further details on the comparable sales calculation.
Certain components of the Company's Condensed Consolidated Balance Sheets as of May 2, 2026 and January 31, 2026 were as follows:
(in thousands) May 2, 2026 January 31, 2026
Cash and equivalents $ 594,080 $ 759,540
Marketable securities 25,144 25,036
Inventories 532,691 601,218
Certain components of the Company's Condensed Consolidated Statements of Cash Flows for the thirteen-week periods ended May 2, 2026 and May 3, 2025 were as follows:
(in thousands) May 2, 2026 May 3, 2025
Net cash provided by (used for) operating activities $ 44,256 $ (4,000)
Net cash used for investing activities (61,341) (30,764)
Net cash used for financing activities (147,628) (234,513)
Abercrombie & Fitch Co.
2026 1Q Form 10-Q
RESULTS OF OPERATIONS
The estimated basis point ("BPS") change disclosed throughout this Results of Operations section has been rounded based on the change in the percentage of net sales.
Net sales
Net sales by segment are presented by attributing revenues to a physical store location or geographical region that fulfills the order. The Company's net sales by reportable segment for the thirteen weeks ended May 2, 2026 and May 3, 2025 were as follows:
Thirteen Weeks Ended
(in thousands, except ratios) May 2, 2026 May 3, 2025 $ Change % Change
Comparable
Sales (1)
By segment:
Americas $ 899,944 $ 874,804 $ 25,140 3 % 1 %
EMEA 167,373 185,036 (17,663) (10) (11)
APAC 46,504 37,471 9,033 24 15
Total $ 1,113,821 $ 1,097,311 $ 16,510 2 (1)
(1)Comparable sales are calculated on a constant currency basis. Refer to "NON-GAAP FINANCIAL MEASURES," for further details on the comparable sales calculation.
For the first quarter of Fiscal 2026, net sales increased 2%, as compared to the first quarter of Fiscal 2025. The increase was primarily attributable to low-single-digit AUR growth, driven by selected changes to tickets and promotions, coupled with an increase in new owned and operated stores and favorable foreign currency. The year-over-year increase in net sales reflects negative comparable sales of (1)%, as compared to the first quarter of Fiscal 2025. On a geographic basis for the first quarter of Fiscal 2026:
•Net sales growth in the Americas region of 3% and 1% on a reported and comparable sales basis, respectively. The reported increase was primarily attributable to low-single-digit AUR growth, and low-single-digit direct channel unit volume growth with an increases in Company-owned and operated stores, and digital channels. The comparable sales growth percentage is lower than net sales growth percentage, as comparable sales excludes the net impact of new store openings during the period which had a benefit on net sales growth.
•Net sales decline in the EMEA region of (10)% and (11)% on a reported and comparable sales basis, respectively. The reported decline was attributable lower third-party volume, particularly in the Middle East and other European markets as regional conflict conditions escalated during the quarter, partially offset by a low-single-digit AUR growth and favorable foreign currency. Direct unit channel volume decreased by high-single digits, with decreases in Company-owned and operated stores and digital channels.
•Net sales growth in the APAC region of 24% and 15% on a reported and comparable sales basis, respectively. The reported increase was led by high-single-digit AUR growth, higher third-party volume and favorable foreign currency. Direct unit channel volume increased low-double digits with increases in Company-owned and operated stores and digital channels. The comparable sales growth percentage is lower than net sales growth percentage, as comparable sales excludes the net impact of new store openings during the period which had a benefit on net sales growth.
The Company's net sales by brand for the thirteen weeks ended May 2, 2026 and May 3, 2025 were as follows:
Thirteen Weeks Ended
(in thousands, except ratios) May 2, 2026 May 3, 2025 $ Change % Change
Comparable
Sales (1)
Abercrombie
$ 564,719 $ 547,947 $ 16,772 3 % - %
Hollister
549,102 549,364 (262) - (2)
Total $ 1,113,821 $ 1,097,311 $ 16,510 2 (1)
(1)Comparable sales are calculated on a constant currency basis. Refer to "NON-GAAP FINANCIAL MEASURES," for further details on the comparable sales calculation.
Cost of sales, exclusive of depreciation and amortization
Thirteen Weeks Ended
May 2, 2026 May 3, 2025
(in thousands, except ratios) % of Net sales % of Net sales BPS Change
Cost of sales, exclusive of depreciation and amortization $ 413,838 37.2 % $ 417,133 38.0 % (80)
For the first quarter of Fiscal 2026, cost of sales, exclusive of depreciation and amortization, as a percentage of net sales decreased by approximately 80 basis points, as compared to the first quarter of Fiscal 2025. The percentage decrease was primarily attributable to cost of sales leverage from a 180 basis point decline in freight costs, a decline in foreign currency and AUR growth driven by selected changes to tickets and promotions, partially offset by 180 basis points of adverse tariff impacts, compared to the first quarter of Fiscal 2025.
Abercrombie & Fitch Co.
2026 1Q Form 10-Q
Selling expense
Thirteen Weeks Ended
May 2, 2026 May 3, 2025
(in thousands, except ratios) % of Net sales % of Net sales BPS Change
Selling expense $ 431,195 38.7 % $ 399,937 36.4 % 230
For the first quarter of Fiscal 2026, selling expense increased by $31 million, as compared to the first quarter of Fiscal 2025. Selling expense as a percentage of net sales increased 230 basis points, as compared to the first quarter of Fiscal 2025. The increase in rate was primarily driven by expense deleverage, with an approximate 190 basis point increase in store occupancy, payroll and other controllable costs, an approximate 90 basis point increase in marketing, partially offset by an approximate 60 basis point decline in fulfillment expense.
General and administrative expense
Thirteen Weeks Ended
May 2, 2026 May 3, 2025
(in thousands, except ratios) % of Net sales % of Net sales BPS Change
General and administrative expense
$ 182,754 16.4 % $ 174,925 15.9 % 50
For the first quarter of Fiscal 2026, general and administrative expense increased by $8 million, as compared to the first quarter of Fiscal 2025. General and administrative expense as a percentage of net sales increased 50 basis points, as compared to the first quarter of Fiscal 2025. The increase in expense rate was primarily driven by a 60 basis point increase in employee compensation costs, occupancy and other administrative expenses.
Other operating (income) loss, net
Thirteen Weeks Ended
May 2, 2026 May 3, 2025
(in thousands, except ratios) % of Net sales % of Net sales BPS Change
Other operating (income) loss, net $ (2,763) (0.2) % $ 3,783 0.3 % (50)
Operating income
Thirteen Weeks Ended
May 2, 2026 May 3, 2025
(in thousands, except ratios)
% of Net sales(1)
% of Net sales(1)
BPS Change
Americas $ 230,929 25.7 % $ 226,960 25.9 % (20)
EMEA 3,404 2.0 16,034 8.7 (670)
APAC (885) (1.9) (4,410) (11.8) 990
Operating loss not attributed to segments (144,651) (137,051)
Operating income $ 88,797 8.0 $ 101,533 9.3 (130)
(1) Segment operating income as a percentage of net sales is calculated by attributing the segment's operating income with the respective net sales in the segment.
For the first quarter of Fiscal 2026, operating income decreased by $13 million, or 130 basis points, as a percentage of net sales, as compared to the first quarter of Fiscal 2025.
•Operating income for the Americas region increased $4 million, and decreased 20 basis points as a percentage of region net sales, as compared to the first quarter of Fiscal 2025. The decrease as a percent of sales was primarily attributed to deleverage in marketing investments and store-related expenses, partially offset by cost of sales leverage.
•Operating income for the EMEA region decreased $12.6 million or 670 basis points as a percentage of region net sales, as compared to the first quarter of Fiscal 2025. The decrease as a percent of sales is primarily attributed to deleverage in store-related expenses, partially offset by cost of sales leverage.
•Operating (loss) for the APAC region decreased by $3.5 million or 990 basis points as a percentage of region net sales, as compared to the first quarter of Fiscal 2025. The decrease as a percent of sales is primarily attributed to leverage in cost of sales, store-related, fulfillment and administrative expenses.
Abercrombie & Fitch Co.
2026 1Q Form 10-Q
Interest income, net
Thirteen Weeks Ended
May 2, 2026 May 3, 2025
(in thousands, except ratios) % of Net sales % of Net sales BPS Change
Interest expense $ 450 - % $ 661 0.1 % (10)
Interest income (5,737) (0.5) (7,444) (0.7) 20
Interest income, net $ (5,287) (0.5) $ (6,783) (0.6) 10
For the first quarter of Fiscal 2026, interest income, net decreased $1.5 million, as compared to the first quarter of Fiscal 2025. The net decrease was a result of a reduction in interest income due to the decrease in balance and yield on time deposits and money market accounts compared to the first quarter of Fiscal 2025.
Income tax expense
Thirteen Weeks Ended
May 2, 2026 May 3, 2025
(in thousands, except ratios) Effective Tax Rate Effective Tax Rate
Income tax expense $ 25,965 27.6 % $ 26,577 24.5 %
The change in the effective tax rate for the first quarter of Fiscal 2026, as compared with the first quarter of Fiscal 2025, is due to jurisdictional mix and a lower tax benefit on share-based compensation compared with the prior-year period
Refer to Note 9, "INCOME TAXES."
Net income attributable to A&F
Thirteen Weeks Ended
May 2, 2026 May 3, 2025
(in thousands) % of Net sales % of Net sales BPS Change
Net income attributable to A&F $ 67,134 6.0 % $ 80,413 7.3 % (130)
Net income per share attributable to A&F
Thirteen Weeks Ended
May 2, 2026 May 3, 2025 $ Change
Net income per diluted share attributable to A&F
$ 1.47 $ 1.59 $ (0.12)
Impact from changes in foreign currency exchange rates - 0.11 (0.11)
Net income per diluted share attributable to A&F on a constant currency basis (1)
$ 1.47 $ 1.70 $ (0.23)
(1) Refer to "NON-GAAP FINANCIAL MEASURES" for further details.
EBITDA
Thirteen Weeks Ended
May 2, 2026 May 3, 2025
(in thousands, except ratios) % of Net sales % of Net sales BPS Change
Net income $ 68,119 6.1 % $ 81,739 7.4 % (130)
Income tax expense 25,965 2.3 26,577 2.4 (10)
Interest income, net
(5,287) (0.5) (6,783) (0.6) 10
Depreciation and amortization 42,304 3.9 38,576 3.6 30
EBITDA (1)
$ 131,101 11.8 $ 140,109 12.8 (100)
(1)EBITDA is a supplemental financial measure that is not defined or prepared in accordance with GAAP. EBITDA is defined as net income before interest, income taxes and depreciation and amortization.
Abercrombie & Fitch Co.
2026 1Q Form 10-Q
LIQUIDITY AND CAPITAL RESOURCES
Overview
The Company's capital allocation strategy and priorities are reviewed by A&F's Board of Directors quarterly, considering both liquidity and valuation factors. The Company believes that it will have adequate liquidity to fund operating activities for the next twelve months. The Company monitors market conditions and may in the future determine whether and when to repurchase shares of its Common Stock. For a discussion of the Company's share repurchase activity, please see below under "Share repurchases."
Primary sources and uses of cash
The Company's business has two principal selling seasons: Spring and Fall. The Company generally experiences its greatest sales activity during the Fall season due to the back-to-school and holiday sales periods. The Company relies on excess operating cash flows, which are largely generated in Fall, to fund operations throughout the fiscal year and to reinvest in the business to support future growth. The Company also has the ABL Facility available as a source of additional funding, which is described further below under "Credit facility."
Over the next twelve months, the Company expects its primary cash requirements to be directed towards prioritizing investments in the business and continuing to fund operating activities, including the acquisition of inventory, obligations related to compensation, marketing, data and technology, leases and any lease buyouts or modifications it may exercise, taxes and other operating activities. In addition, management continuously evaluates potential opportunities to strategically deploy excess cash and/or deleverage the balance sheet, in consideration of various factors, such as market and business conditions, and the Company's ability to accelerate investments in the business. Such opportunities may include, but are not limited to, share repurchases.
When evaluating opportunities for investments in the business, management considers alignment with initiatives that position the business for sustainable long-term growth and with the Company's strategic priorities as described within Part I, "Item 1. Business - STRATEGY AND KEY BUSINESS PRIORITIES" included in the Fiscal 2025 Form 10-K, including being opportunistic regarding areas for growth. Examples of potential investment opportunities include, but are not limited to, new store experiences, and investments in the Company's digital and omnichannel initiatives. Historically, the Company has utilized free cash flow generated from operations to fund any discretionary capital expenditures, which have been prioritized towards new store experiences, as well as marketing, digital and omnichannel investments, and information technology. For the year-to-date period ended May 2, 2026, the Company invested $61.3 million towards capital expenditures. Total capital expenditures for Fiscal 2026 are expected to be around $225 million.
The Company measures liquidity using total cash and cash equivalents and incremental borrowing available under the ABL Facility. As of May 2, 2026, the Company had cash and cash equivalents of $594.1 million and total liquidity of approximately $1.0 billion, compared with cash and cash equivalents of $759.5 million and total liquidity of approximately $1.2 billion at the beginning of Fiscal 2026.
Share repurchases
In March 2025, the Company announced that the Board of Directors approved a $1.3 billion share repurchase program (the "2025 Authorization"), which replaced the prior share repurchase program of $500 million authorized by the Board of Directors in 2021. The 2025 Authorization does not have an expiration date.
During the fiscal year-to-date period ended May 2, 2026, the Company repurchased approximately 1.2 million shares of its Common Stock pursuant to the 2025 Authorization for approximately $105 million. As of May 2, 2026, the Company had $745 million in share repurchases remaining under the 2025 Authorization.
Historically, the Company has repurchased shares of its Common Stock from time to time, which repurchases are dependent on excess liquidity, market conditions and business conditions, with the objectives of returning excess cash to shareholders and offsetting dilution from issuances of Common Stock associated with the vesting of restricted stock units. Shares may be repurchased from time to time in the open market or private transactions in such manner as may be deemed advisable from time to time (including, without limitation, pursuant to accelerated share repurchase programs, one or more 10b5-1 trading plans, or any other method deemed advisable) and may be discontinued at any time. The timing and amount of any such repurchases will be determined based on an evaluation of market conditions, the Company's share price, legal requirements, and other factors. The Company is not obligated to repurchase any specific amount of shares of its Common Stock.
Abercrombie & Fitch Co.
2026 1Q Form 10-Q
Credit facility
On August 2, 2024, A&F, as parent and a guarantor, A&F Management Co., as lead borrower, and certain of A&F's direct and indirect wholly-owned subsidiaries, as additional borrowers and guarantors, entered into the Second Amendment to the Amended and Restated Credit Agreement (as amended, the "ABL Credit Agreement"). The ABL Credit Agreement provides for a senior secured asset-based revolving credit facility of up to $500 million (the "ABL Facility"), which matures on August 2, 2029. The ABL Facility is subject to a borrowing base, consisting primarily of inventory located in the U.S., the United Kingdom, and the Netherlands, with a letter of credit sub-limit of $62.5 million, a swing line loan sub-limit of $30 million, and an accordion feature allowing A&F to increase the revolving commitment by up to $150 million subject to specified conditions.
As of May 2, 2026, the Company did not have any borrowings outstanding under the ABL Facility.
Details regarding the remaining borrowing capacity under the ABL Facility as of May 2, 2026 are as follows:
(in thousands) May 2, 2026
Loan cap $ 500,000
Less: Outstanding stand-by letters of credit (469)
Borrowing capacity 499,531
Less: Minimum excess availability (1)
(50,000)
Borrowing capacity available $ 449,531
(1) Under the ABL Facility, the Company must maintain excess availability equal to the greater of 10% of the loan cap or $36 million.
Refer to Note 10, "BORROWINGS."
Income taxes
The Company's earnings and profits from its foreign subsidiaries could be repatriated to the U.S. without incurring additional federal income tax. The Company determined that the balance of the Company's undistributed earnings and profits from its foreign subsidiaries as of February 2, 2019 are considered indefinitely reinvested outside of the U.S., and if these funds were to be repatriated to the U.S., the Company would expect to incur an insignificant amount of state income taxes and foreign withholding taxes. The Company accrues for both state income taxes and foreign withholding taxes with respect to earnings and profits earned after February 2, 2019, in such a manner that these funds could be repatriated without incurring additional tax expense. As of May 2, 2026, $225.7 million of the Company's $594.1 million of cash and equivalents were held by foreign affiliates.
Refer to Note 9, "INCOME TAXES."
Analysis of cash flows
The table below provides certain components of the Company's Condensed Consolidated Statements of Cash Flows for the thirteen weeks ended May 2, 2026 and May 3, 2025:
Thirteen Weeks Ended
May 2, 2026 May 3, 2025
(in thousands)
Cash and equivalents, and restricted cash and equivalents, beginning of period $ 766,916 $ 780,395
Net cash provided by (used for) operating activities 44,256 (4,000)
Net cash used for investing activities (61,341) (30,764)
Net cash used for financing activities (147,628) (234,513)
Effect of foreign currency exchange rates on cash (787) 7,407
Net decrease in cash and equivalents, and restricted cash and equivalents (165,500) (261,870)
Cash and equivalents, and restricted cash and equivalents, end of period $ 601,416 $ 518,525
Abercrombie & Fitch Co.
2026 1Q Form 10-Q
Operating activities - For the fiscal year-to-date period ended May 2, 2026, net cash provided by operating activities increased by $48.3 million, primarily related to $32.8 million in lower inventory receipts and increased cash receipts as a result of the 2% year-over-year increase in net sales, as well as $9.6 million from the impact from changes in accounts payable and accrued expenses related to the timing of merchandise payables and decreased incentive compensation payments. During the fiscal year-to-date period ended May 3, 2025, net cash used for operating activities included an increase in cash outflows related to the timing of merchandise and advertising payables, partially offset by increased cash receipts as a result of the 8% year-over-year increase in net sales.
Investing activities - For the fiscal year-to-date period ended May 2, 2026, net cash used for investing activities increased by $30.6 million primarily related to capital expenditures of $61.3 million Net cash used for investing activities for the fiscal year-to-date period ended May 3, 2025 was primarily used for capital expenditures of $50.8 million, partially offset by the maturity of $20.0 million of marketable securities.
Financing activities - For the fiscal year-to-date period ended May 2, 2026, net cash used for financing activities included the purchase of approximately 1.2 million shares of Common Stock with a market value of approximately $105.0 million and $38.4 million related to shares of Common Stock withheld (repurchased) to cover tax withholdings upon vesting of share-based compensation awards. During the fiscal year-to-date period ended May 3, 2025, net cash used for financing activities included the purchase of approximately 2.6 million shares of Common Stock with a market value of approximately $200.0 million and $34.1 million related to shares of Common Stock withheld (repurchased) to cover tax withholdings upon vesting of share-based compensation awards.
Contractual obligations
The Company's contractual obligations consist primarily of operating leases, purchase orders for merchandise inventory, unrecognized tax benefits, certain retirement obligations, lease deposits, and other agreements to purchase goods and services that are legally binding and that require minimum quantities to be purchased. These contractual obligations impact the Company's short-term and long-term liquidity and capital resource needs.
There have been no material changes in the Company's contractual obligations since January 31, 2026, with the exception of those obligations which occurred in the normal course of business (primarily changes in the Company's merchandise inventory-related purchases and lease obligations, which fluctuate throughout the year as a result of the seasonal nature of the Company's operations).
RECENT ACCOUNTING PRONOUNCEMENTS
The Company describes its significant accounting policies in Note 2, "SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES," of the Notes to Consolidated Financial Statements contained in "Item 8. Financial Statements and Supplementary Data" included on the Fiscal 2025 Form 10-K. The Company reviews recent accounting pronouncements on a quarterly basis and has excluded discussion of those not applicable to the Company and those that did not have, or are not expected to have, a material impact on the Company's consolidated financial statements.
CRITICAL ACCOUNTING ESTIMATES
The Company describes its critical accounting estimates in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" included on the Fiscal 2025 Form 10-K. There have been no significant changes in critical accounting policies and estimates since the end of Fiscal 2025.
NON-GAAP FINANCIAL MEASURES
This Quarterly Report on Form 10-Q includes discussion of certain financial measures calculated and presented on both a GAAP and a non-GAAP basis. The Company believes that each of the non-GAAP financial measures presented in this "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" is useful to investors as it provides a meaningful basis to evaluate the Company's operating performance excluding the effect of certain items that the Company believes may not reflect its future operating outlook, thereby supplementing investors' understanding of comparability of operations across periods. Management used these non-GAAP financial measures during the periods presented to assess the Company's performance and to develop expectations for future operating performance. These non-GAAP financial measures should be used as a supplement to, and not as an alternative to, the Company's GAAP financial results, and may not be calculated in the same manner as similar measures presented by other companies.
Comparable sales
The Company provides comparable sales, defined as the year-over-year percentage change in the aggregate of (1) net sales for stores that have been open as the same brand at least one year and square footage has not been expanded or reduced by more than 20% within the past year, with the prior year's net sales converted at the current year's foreign currency exchange rates to remove the impact of foreign currency exchange rate fluctuations, and (2) digital net sales with the prior year's net sales
Abercrombie & Fitch Co.
2026 1Q Form 10-Q
converted at the current year's foreign currency exchange rates to remove the impact of foreign currency exchange rate fluctuations. Comparable sales excludes revenue other than store and digital sales. Management uses comparable sales to understand the drivers of year-over-year changes in net sales and believes that comparable sales can be a useful metric as it can assist investors in distinguishing the portion of the Company's revenue attributable to existing locations from the portion attributable to the opening or closing of stores. The most directly comparable GAAP financial measure is change in net sales.
Financial information on a constant currency basis
The Company provides certain financial information on a constant currency basis to enhance investors' understanding of underlying business trends and operating performance by removing the impact of foreign currency exchange rate fluctuations. Management also uses financial information on a constant currency basis to award employee performance-based compensation. The effect from foreign currency exchange rates, calculated on a constant currency basis, is determined by applying the current period's foreign currency exchange rates to the prior year's results and is net of the year-over-year impact from hedging. The per diluted share effect from foreign currency exchange rates is calculated using a 26% effective tax rate.
Reconciliations of non-GAAP financial metrics on a constant currency basis to financial measures calculated and presented in accordance with GAAP for the thirteen weeks ended May 2, 2026 and May 3, 2025 were as follows:
(in thousands, except change in net sales, operating income margin and per share data)
Thirteen Weeks Ended
Net sales May 2, 2026 May 3, 2025 % Change
GAAP $ 1,113,821 $ 1,097,311 2 %
Impact from changes in foreign currency exchange rates - 11,019 (1)
Non-GAAP on a constant currency basis $ 1,113,821 $ 1,108,330 - %
Operating income May 2, 2026 May 3, 2025
BPS Change (1)
GAAP $ 88,797 $ 101,533 (130)
Impact from changes in foreign currency exchange rates - 7,486 (50)
Non-GAAP on a constant currency basis $ 88,797 $ 109,019 (180)
Net income per share attributable to A&F May 2, 2026 May 3, 2025 $ Change
GAAP $ 1.47 $ 1.59 $ (0.12)
Impact from changes in foreign currency exchange rates - 0.11 (0.11)
Non-GAAP on a constant currency basis $ 1.47 $ 1.70 $ (0.23)
(1) The estimated basis point change has been rounded based on the change in the percentage of net sales.
EBITDA
The Company provides EBITDA as a supplemental measure used by the Company's executive management to assess the Company's performance. We also believe this supplemental performance measure is meaningful information for investors and other interested parties to use in computing the Company's core financial performance over multiple periods and with other companies by excluding the impact of differences in tax jurisdictions, debt service levels and capital investment.
A reconciliation of non-GAAP EBITDA to net income, a financial measure calculated and presented in accordance with GAAP, for the thirteen weeks ended May 2, 2026 and May 3, 2025 were as follows:
Thirteen Weeks Ended
(in thousands, except ratios) May 2, 2026 % of
Net Sales 		May 3, 2025 % of
Net Sales
Net income $ 68,119 6.1 % $ 81,739 7.4 %
Income tax expense 25,965 2.3 26,577 2.4
Interest income, net
(5,287) (0.5) (6,783) (0.6)
Depreciation and amortization 42,304 3.9 38,576 3.6
EBITDA (1)
$ 131,101 11.8 $ 140,109 12.8
(1)EBITDA is a supplemental financial measure that is not defined or prepared in accordance with GAAP. EBITDA is defined as net income before interest, income taxes and depreciation and amortization. Refer to "NON-GAAP FINANCIAL MEASURES" for further details.
Abercrombie & Fitch Co.
2026 1Q Form 10-Q
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