Abercrombie & Fitch Reports 7.5% Sales Increase but Declines in Net Income for Quarter Ended May 3, 2025

Abercrombie & Fitch Co. reported its financial results for the thirteen weeks ended May 3, 2025, revealing a net sales increase of 7.5% to $1.097 billion, compared to $1.021 billion in the same period last year. However, net income attributable to the company decreased to $80.4 million, or $1.59 per diluted share, down from $113.9 million, or $2.14 per diluted share, in the prior year. The decline in profitability was attributed to increased costs, particularly in freight and selling expenses, which rose to $399.9 million, representing 36.4% of net sales, compared to 35.3% in the previous year.

The company experienced significant changes in its operational metrics, with a notable increase in cost of sales, which rose to $417.1 million, or 38.0% of net sales, up from 33.6% a year earlier. This increase was primarily driven by higher freight costs and other operational expenses. General and administrative expenses decreased to $174.9 million, or 15.9% of net sales, down from 18.6% in the prior year, reflecting a reduction in employee compensation costs and other administrative expenses.

In terms of strategic developments, Abercrombie & Fitch has continued to focus on its "Always Forward Plan," which emphasizes digital transformation and geographic expansion. The company opened seven new stores and remodeled nine during the quarter, while also closing three locations. The company aims for approximately 40 net store openings in Fiscal 2025, alongside ongoing investments in digital and omnichannel initiatives. The company’s inventory levels decreased to $542.1 million from $575.0 million, indicating a strategic focus on inventory management.

Looking ahead, Abercrombie & Fitch anticipates challenges due to macroeconomic conditions, including inflation and potential tariff impacts, which could affect consumer spending and operational costs. The company expects to incur approximately $50 million in tariff expenses, which may negatively impact operating profit. Despite these challenges, the company remains committed to executing its growth strategies and maintaining financial discipline, with a focus on leveraging its strong balance sheet and cash flow to support future investments.