When Good News Isn't Good Enough

Abercrombie & Fitch Company (ANF) shares got hammered Monday, falling over 15% after the apparel retailer updated its business outlook for fiscal 2025. The company's crime? Narrowing its guidance ranges, even while heading toward record sales.

In a holiday season update, Abercrombie reported that quarter-to-date net sales through fiscal December came in right where they expected. Sounds pretty good, right? Markets didn't think so.

Here's what spooked investors: The company tightened its full-year net sales growth forecast to exactly 6%, abandoning the previous 6% to 7% range. Management also shaved half a percentage point off operating margin expectations, now pegging it at around 13%. When you're aiming for the low end of your guidance, Wall Street notices.

"We remain on track for another year of significant progress, consistently delivering on our goals with expected record net sales," CEO Fran Horowitz said, putting an optimistic spin on things.

The Tariff Factor

There's more going on beneath the surface. Abercrombie & Fitch disclosed it's earmarking roughly $90 million to cushion the blow from tariffs, equal to about 1.7% of net sales. The company's outlook factors in "estimated impact from the tariffs" based on current policies, but warned that future trade policy changes from the U.S. or other countries could shift the picture.

Despite the cautious tone, the company did raise its net income per diluted share guidance and announced plans to spend $20 million more than previously anticipated.

ANF Price Action: Abercrombie & Fitch shares traded down 15.11% at $105.87 at the time of publication.