Young adult apparel retailer Abercrombie & Fitch (NYSE: ANF) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 7.5% year on year to $1.1 billion. The company expects next quarter’s revenue to be around $1.18 billion, close to analysts’ estimates. Its GAAP profit of $1.59 per share was 19.7% above analysts’ consensus estimates.

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Fran Horowitz, Chief Executive Officer, said, “We delivered record first quarter net sales with 8% growth to last year. This was above our expectations and was supported by broad-based growth across our three regions. Hollister brands led the performance with growth of 22%, achieving its best ever first quarter net sales, while Abercrombie brands net sales were down 4% against 31% sales growth in 2024. We exceeded our expectations on the bottom line as well, with operating margin of 9.3% and earnings per share of $1.59. We also returned excess cash to shareholders through share repurchases totaling $200 million in the quarter, marking our fifth consecutive quarter of share repurchases.

Company Overview

Founded as an outdoor and sporting brand, Abercrombie & Fitch (NYSE: ANF) evolved to become a specialty retailer that sells its own brand of fashionable clothing to young adults.

Sales Growth

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $5.03 billion in revenue over the past 12 months, Abercrombie and Fitch is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.

As you can see below, Abercrombie and Fitch’s 5.7% annualized revenue growth over the last six years (we compare to 2019 to normalize for COVID-19 impacts) was tepid, but to its credit, it opened new stores and increased sales at existing, established locations.

This quarter, Abercrombie and Fitch reported year-on-year revenue growth of 7.5%, and its $1.1 billion of revenue exceeded Wall Street’s estimates by 3.5%. Company management is currently guiding for a 4% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 2.3% over the next 12 months, a deceleration versus the last six years. This projection doesn't excite us and indicates its products will see some demand headwinds. At least the company is tracking well in other measures of financial health.

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Store Performance

Number of Stores

The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.

Abercrombie and Fitch has generally opened new stores over the last two years and averaged 1.3% annual growth, faster than the broader consumer retail sector.

When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.

Note that Abercrombie and Fitch reports its store count intermittently, so some data points are missing in the chart below.

Same-Store Sales

A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales gives us insight into this topic because it measures organic growth for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year.

Abercrombie and Fitch has been one of the most successful retailers over the last two years thanks to skyrocketing demand within its existing locations. On average, the company has posted exceptional year-on-year same-store sales growth of 14.8%. This performance suggests its measured rollout of new stores is beneficial for shareholders. We like this backdrop because it gives Abercrombie and Fitch multiple ways to win: revenue growth can come from new stores, e-commerce, or increased foot traffic and higher sales per customer at existing locations.

In the latest quarter, Abercrombie and Fitch’s same-store sales rose 4% year on year. This was a meaningful deceleration from its historical levels. We’ll be watching closely to see if Abercrombie and Fitch can reaccelerate growth.

Key Takeaways from Abercrombie and Fitch’s Q1 Results

We were impressed by how significantly Abercrombie and Fitch blew past analysts’ EPS expectations this quarter on better-than-expected revenue. Additionally, the company raised its full-year guidance for revenue growth. On the other hand, its EPS guidance for next quarter fell short of Wall Street’s estimates. Overall, this print was mixed, but given how much difficulty some retailers have had this quarter, the market is rewarding Abercrombie and Fitch. The stock traded up 25% to $96.41 immediately after reporting.

Is Abercrombie and Fitch an attractive investment opportunity at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.