Abercrombie & Fitch Shares Plunge After Minor Earnings Outlook Adjustment

Abercrombie & Fitch’s stock plunged 7.3% in after-hours trading on January 12, 2026, after the retailer adjusted its full-year sales growth outlook for fiscal 2026 to a range of 2% to 3%, down from the previous guidance of 3% to 4%. The move came just days after the company reported its best two-month stock rally since 1999, with shares surging 24.8% in January. The revision, though small in percentage terms, triggered investor concern over slowing momentum in its core North American business, where same-store sales rose 1.4% in the latest quarter—below the 2.0% growth analysts had expected. The company cited cautious consumer spending trends and increased promotional activity to clear inventory as key factors behind the revised outlook. Despite this, Abercrombie & Fitch reported adjusted earnings per share of $1.18 for the fourth quarter, beating estimates by $0.07, and revenue of $987 million, up 4.1% year-over-year. The company also announced a $150 million share repurchase program, signaling confidence in its long-term value. Market reaction underscored the sensitivity of retail stocks to even minor shifts in guidance, particularly in a high-interest-rate environment where growth expectations are closely scrutinized. Investors appeared to prioritize forward-looking signals over recent performance, with analyst ratings shifting from 'buy' to 'hold' across multiple firms. The stock’s decline affected broader apparel sector indices, with Lululemon and Urban Outfitters each seeing a 1.5% dip in after-hours trading. Abercrombie & Fitch remains committed to its long-term transformation strategy, including digital expansion and international growth, with plans to open 15 new international stores in 2026. However, the market’s immediate reaction highlights the premium placed on consistency in guidance, especially for companies recovering from prolonged downturns.