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Abercrombie Shares Slide as Tariffs Weigh Heavy

The retailer has adjusted its outlook to anticipate additional tariffs of as much as 30 percent.
An Abercrombie & Fitch store in Toronto | Source: Shutterstock
By
  • Bloomberg

NEW ALBANY, United States — Abercrombie & Fitch Co. plunged as sales fell short of expectations in the latest quarter, sparking concern as tariffs loom over US apparel companies.

Same-store sales, a key metric for retailers, were flat for its Abercrombie and Hollister brand. The retailer now sees net sales being flat to up 2 percent for the full year — down from a previous range. The stock slid as much as 14 percent to $14.66 in New York, the biggest intraday slide in three months.

Key Insights

UBS analyst Jay Sole wrote earlier this month that the bar for apparel retailers is “essentially unreachable” this quarter due to the “major risk” of tariffs. With US duties on Chinese goods poised to rise, Abercrombie said the latest round of tariffs are “expected to have a direct adverse impact on cost of merchandise and gross profit of approximately $6 million for the fall season.”

The retailer’s revised outlook includes tariff risk and factors in anticipated additional tariffs of as much as 30 percent.

The quarterly result exacerbates the pressure on Abercrombie. It had rebounded in recent quarters, largely on the strength of its Hollister brand, but that momentum seems to have faded.

Market Reaction

Abercrombie’s shares had declined 15 percent this year through Wednesday’s close, part of a broad decline by apparel retailers.

By Jonathan Roeder and Jordyn Holman in New York; editors: Anne Riley Moffat and Cécile Daurat.

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