Q2 FY2026
Filed Aug 26, 2026Record second quarter net sales of $1.3 billion, up 5% to last year, with operating margin of 20% and earnings per diluted share of $4.17, including an approximately $100 million pre-tax IEEPA tariff refund benefit.
Net sales rose 5% to a record $1.3 billion, all geographic regions grew, and reported operating margin reached 19.9%. Results exceeded the company's second-quarter outlook, although approximately $100 million of IEEPA tariff refunds provided a 790 basis point operating-margin benefit and a $1.75 per diluted share benefit.
Actuals vs. the company’s prior outlook
from its previous release| Metric | Guided | Reported | Verdict |
|---|---|---|---|
| Second-quarter operating margin | Around 10% | 19.9% | above |
| Second-quarter net income per diluted share | In The Range of $1.80 to $2.00 | $4.17 | above |
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net salesGAAP | $1,266.689 million | – | 5% |
| Comparable salesnon-GAAP | flat | – | flat |
| Cost of sales, exclusive of depreciation and amortizationGAAP | $366.109 million | – | – |
| Selling expenseGAAP | $444.042 million | – | – |
| General and administrative expenseGAAP | $204.784 million | – | – |
| Operating incomeGAAP | $252.700 million | – | – |
| Operating marginGAAP | 19.9% | – | 280 bps |
| Adjusted operating incomenon-GAAP | $252.700 million | – | – |
| Adjusted operating marginnon-GAAP | 19.9% | – | 600 bps |
| Net incomeGAAP | $185.539 million | – | – |
| Net income attributable to A&FGAAP | $183.720 million | – | – |
| Diluted net income per share attributable to A&FGAAP | $4.17 | – | $1.26 |
| Adjusted diluted net income per share attributable to A&Fnon-GAAP | $4.17 | – | $1.85 |
| Adjusted diluted net income per share attributable to A&F on a constant currency basisnon-GAAP | $4.17 | – | $1.84 |
| EBITDAnon-GAAP | $295.979 million | – | – |
| Adjusted EBITDAnon-GAAP | $295.979 million | – | – |
| Diluted weighted-average shares outstandingGAAP | 44.051 million | – | – |
| IEEPA tariff refunds impact on operating incomeother | approximately $100 million benefit | – | – |
| IEEPA tariff refunds impact on operating marginother | 790 bps benefit | – | – |
| IEEPA tariff refunds impact on net income per diluted shareother | $1.75 benefit | – | – |
| Year-to-date net salesGAAP | $2,380.510 million | – | – |
| Year-to-date operating incomeGAAP | $341.497 million | – | – |
| Year-to-date diluted net income per share attributable to A&FGAAP | $5.59 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| AmericasComparable sales increased 1%. | $1,020.537 million | – | 5% |
| EMEAComparable sales decreased (4)%. | $201.990 million | – | 2% |
| APACComparable sales increased 13%. | $44.162 million | – | 19% |
| AbercrombieComparable sales increased 4%. | $596.808 million | – | 8% |
| HollisterComparable sales decreased (3)%. | $669.881 million | – | 2% |
Fiscal 2026 full year and third quarter outlook
- RevenueFiscal 2026: Growth Around 5%; Third quarter: Growth In The Range of 5% to 6%
- Tax rateFiscal 2026: Around 29%; Third quarter: Around 29%
- NoteFiscal 2026 operating margin: In The Range of 14.5% to 15.0%.
- NoteThird quarter operating margin: In The Range of 13.0% to 14.0%.
- NoteFiscal 2026 IEEPA tariff refund impact: Favorability of around 220 bps.
- NoteThird quarter IEEPA tariff refund impact: Favorability of around 160 bps.
- NoteFiscal 2026 net income per diluted share: In The Range of $13.10 to $13.60.
- NoteThird quarter net income per diluted share: In The Range of $2.90 to $3.20.
- NoteFiscal 2026 share repurchases: At least $500 million.
- NoteThird quarter share repurchases: At least $100 million.
- NoteFiscal 2026 diluted weighted average shares: Around 44 million.
- NoteThird quarter diluted weighted average shares: Around 43 million.
- NoteFiscal 2026 capital expenditures: Around $250 million.
- NoteFiscal 2026 real estate activity: ~30 Net Store Openings, 50 Openings, 20 Closures, and 80 Remodels and Right-Sizes.
- NoteEstimated IEEPA tariff refunds are $20 million in the third quarter and $120 million in full-year fiscal 2026.
- NoteEstimated impact of tariff refunds on net income per diluted share, inclusive of interest, is $0.35 in the third quarter and $2.10 for full-year fiscal 2026.
- NoteOutlook reflects the estimated impact, net of planned mitigation efforts, of an effective 10% to 12.5% tariff rate on all goods imported into the United States for the remainder of fiscal 2026.
Capital returns
- During the second quarter of 2026, the company repurchased 2.0 million shares for approximately $177 million.
- For the year-to-date period ended August 1, 2026, the company repurchased 3.2 million shares for $282 million, representing a 7% reduction in shares outstanding from the beginning of the year.
- The company has $568 million remaining on the share repurchase authorization established in March 2025.
- Fiscal 2026 share repurchase outlook was increased to at least $500 million from around $450 million.
What drove it
- Record second-quarter net sales of $1.3 billion marked the company's 15th consecutive quarter of growth.
- Net sales increased across regions: Americas was up 5%, APAC was up 19%, and EMEA was up 2%.
- Both brand families delivered record second-quarter net sales, led by 8% growth at Abercrombie.
- The company received approximately $100 million in IEEPA tariff refunds, reflected as a reduction of cost of sales.
- Interest income, net was $7.591 million, compared with $2.474 million in the prior-year quarter.
- Management cited investments across stores, digital, technology and marketing, as well as incremental growth levers across partnerships, distribution channels and product categories.
Concerns
- Total-company comparable sales were flat despite 5% reported net sales growth.
- Comparable sales declined (4)% in EMEA and (3)% at Hollister.
- Selling expense was $444.042 million, or 35.1% of net sales, compared with $375.356 million, or 31.1% of net sales, in the prior-year quarter.
- General and administrative expense was $204.784 million, or 16.2% of net sales, compared with $175.325 million, or 14.5% of net sales, in the prior-year quarter.
- Reported second-quarter operating results included approximately $100 million of IEEPA tariff refunds and a $1.75 benefit to net income per diluted share.
- The outlook is sensitive to jurisdictional mix and level of income, and does not include potential future tax policy or legislative changes.
What to watch
- Whether third-quarter net sales growth lands within the 5% to 6% outlook range and whether comparable-sales performance improves from flat.
- The performance of EMEA and Hollister after their respective comparable-sales declines of (4)% and (3)%.
- Delivery against third-quarter operating-margin guidance of 13.0% to 14.0%, including the estimated $20 million IEEPA tariff refunds.
- The extent to which the forecast effective 10% to 12.5% tariff rate and planned mitigation efforts affect full-year operating margin.
- Execution of at least $100 million of third-quarter and at least $500 million of full-year share repurchases.
- Delivery of approximately 30 net store openings, 50 openings, 20 closures, and 80 remodels and right-sizes planned for fiscal 2026.
Balance sheet and cash flow
- Cash and equivalents were $628 million as of August 1, 2026, compared to $760 million as of January 31, 2026 and $573 million as of August 2, 2025.
- Marketable securities were $10 million, compared to $25 million as of January 31, 2026 and $31 million as of August 2, 2025.
- Inventories were $592 million, compared to $601 million as of January 31, 2026 and $593 million as of August 2, 2025.
- Borrowing capacity under the ABL Facility was $500 million, with net borrowing available of $450 million after the minimum excess availability requirement.
- Liquidity was approximately $1.1 billion as of August 1, 2026, compared to $1.2 billion as of January 31, 2026 and $1.0 billion as of August 2, 2025.
- Year-to-date net cash provided by operating activities was $313 million, compared to $112.893 million in the prior-year period.
- Year-to-date net cash used for investing activities was $114 million, primarily reflecting capital expenditures, compared to $31.943 million in the prior-year period.
- Year-to-date purchases of property and equipment were $129.357 million, compared to $116.943 million in the prior-year period.
- Year-to-date net cash used for financing activities was $330 million, primarily reflecting share repurchases, compared to $290.713 million in the prior-year period.
- Depreciation and amortization was $86 million for the year-to-date period ended August 1, 2026.
Analysis
Abercrombie & Fitch reported record second-quarter net sales of $1.266.689 billion, up 5% from $1.208.560 billion, extending its growth streak to 15 consecutive quarters. Growth was geographically broad on reported sales, with Americas up 5%, EMEA up 2%, and APAC up 19%. Brand-family sales also increased, led by 8% growth at Abercrombie, while Hollister grew 2%. Comparable sales, however, were flat at the total-company level, with declines in EMEA and Hollister offset by positive comparable sales in the Americas, APAC, and Abercrombie.
Reported profitability was materially elevated by IEEPA tariff refunds. Operating income was $252.700 million and operating margin was 19.9%, versus $206.658 million and 17.1% in the prior-year quarter. The company stated that approximately $100 million in refunds, reflected as a reduction of cost of sales, contributed a 790 basis point operating-margin benefit and a $1.75 benefit to diluted EPS. Excluding the prior year's litigation settlement, adjusted operating margin rose from 13.9% to 19.9%, and adjusted diluted EPS rose from $2.32 to $4.17. Selling and general and administrative expenses nevertheless consumed higher proportions of sales than a year earlier.
The second-quarter result exceeded the May 27, 2026 outlook of around 10% operating margin and diluted EPS of $1.80 to $2.00. The tariff refund was the principal stated reason for the magnitude of the outperformance. Reported diluted EPS was $4.17, compared with $2.91 in the prior-year period, while diluted weighted-average shares fell to 44.051 million from 48.551 million. Net income attributable to A&F was $183.720 million, compared with $141.383 million.
Cash generation and capital allocation remained substantial. Year-to-date operating cash flow was $313.401 million, while investing cash use was $114.357 million and purchases of property and equipment were $129.357 million. The company repurchased approximately $177 million of shares in the second quarter and $282 million year to date, reducing shares outstanding by 7% from the beginning of the year. Cash and equivalents were $628 million and liquidity was approximately $1.1 billion as of August 1, 2026.
Management raised its full-year sales outlook to growth of around 5% from a prior range of 3% to 5%, lifted operating-margin guidance to 14.5% to 15.0% from 12.0% to 12.5%, and raised diluted EPS guidance to $13.10 to $13.60 from $10.20 to $11.00. It increased planned repurchases to at least $500 million from around $450 million. Third-quarter guidance calls for sales growth of 5% to 6%, operating margin of 13.0% to 14.0%, and diluted EPS of $2.90 to $3.20. That outlook includes estimated IEEPA tariff refunds of $20 million in the third quarter and assumes an effective 10% to 12.5% tariff rate on goods imported into the United States for the remainder of fiscal 2026.
Management, verbatim
We delivered record second quarter net sales and our 15 th consecutive quarter of growth, reflecting our teams’ continued focus on serving customers with compelling product, marketing, and experiences.
Fran Horowitz, Chief Executive Officer
Growth was balanced across our brands and regions, highlighted by accelerating momentum in the Americas and improving trends in EMEA.
Fran Horowitz, Chief Executive Officer
For the year, we expect to grow sales and earnings per share, underpinned by double-digit operating margins, while delivering strong cash flow and returns of cash to shareholders through at least $500 million of share repurchases.
Fran Horowitz, Chief Executive Officer
Not in the filing
stated, not guessed- Free cash flow was not reported.
- A gross margin or gross-profit figure was not reported.
- Quarterly operating cash flow was not reported; cash flow was provided only for the year-to-date period.
- Debt outstanding was not reported.
- Dividend amount or dividend policy was not reported.
- Prior-quarter segment revenue and sequential changes were not reported.
- Third-quarter gross-margin and operating-expense guidance were not reported.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.