By Sabela Ojea

Abercrombie & Fitch guided for lower-than-expected sales growth for the year as it weights the impact of increased tariffs and a weak performance from its namesake brand. Shares fell on pace to the lowest close since December 2023.

The stock was down 14% to $81.98 in morning trading. Shares have dropped 40% over the past 12 months.

The apparel retailer's outlook came as it posted a slowdown in sales across its namesake brand, which offset gains from Hollister, and a sequential deceleration in growth in the Americas and Europe, Middle East and Africa regions.

"We believe shares of Abercrombie could continue to experience weakness through the front part of the year until the Street has a better handle on where comp and operating margin revert to," William Blair analyst Dylan Carden said in a research note.

The company is now working on selling through carryover inventory through promotions as it prepares for a first-quarter performance that is expected to be more normalized on an inventory level and hit by higher freight costs and gross-margin pressure.

"We are controlling what we can control," Chief Executive Fran Horowitz said on a call with analysts, adding that Abercrombie & Fitch projects a positive February despite the continuing weakness of its namesake brand.

For tariffs, Abercrombie & Fitch's outlook includes currently increased U.S. tariffs on China, Mexico and Canada, which are set to have a negative effect of around $5 million on the company's operations in 2025, Finance Chief Robert Ball said.

Abercrombie & Fitch's outlook doesn't include any other potential incremental tariffs, Ball added.

Write to Sabela Ojea at sabela.ojea@wsj.com; @sabelaojeaguix

(END) Dow Jones Newswires

March 05, 2025 12:13 ET (17:13 GMT)

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