Add Abercrombie & Fitch (ANF) to the growing list of American retailers getting pounded by investors for warning about the looming effect of Trump tariffs.
Talk about Wall Street being asleep at the wheel in pricing this one into retail stocks!
Shares of Abercrombie & Fitch crashed more than 16% in early trading on Wednesday as the company's holiday quarter sales results at its namesake division came in a little light versus estimates.
What likely unsettled investors more though is the company's 2025 guidance calling for marked slowdowns in sales growth and operating margin expansion.
What could be up to 100 basis points of year over year margin pressure may be tied to the expected impact of fresh tariffs from the Trump administration.
"The outlook for operating margin includes estimated impact from the tariffs announced in February 2025 on goods imported from China, Mexico, and Canada into the United States. It does not include impacts related to other potential future policy or legislative changes, additional potential tariffs imposed by the United States, or potential tariffs imposed by countries other than the United States," Abercrombie said in a small print under its earnings guidance table on its press release.
Abercrombie & Fitch CEO Fran Horowitz told me in November just after Trump's election win that the company will receive 5% to 6% of its US receipts from China in 2024. She noted the company would look to make further adjustments to its supply chain to offset any tariff pressures.
ANF's warning follows similar cautious comments on profits from discount retailer Target (TGT) on Tuesday and electronics chain Best Buy (BBY). Both stocks were subsequently hammered.
Net sales: +9% year over year to $1.58 billion, vs. estimates for $1.57 billion
Comparable sales: +14% vs. +11.5% estimate
Abercrombie & Fitch division sales: $772.7 million, +2% year over year, vs. $807.5 million estimate
Hollister division sales: $812.2 million, +16% year on year, vs. $758 million estimate
Adjusted diluted EPS: +20% year over year to $3.57, vs. $3.54 estimate
Full-year outlook:
Net sales: +3% to +5% (2024 growth rate: +16%)
Operating margin: in the range of 14% to 15% (2024: 15%)
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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