Abercrombie & Fitch (ANF) forecasted a deceleration in sales growth for 2026, citing ongoing tariff-related costs and elevated supply chain expenses. The guidance reflects broader challenges in the consumer discretionary sector.
- Abercrombie & Fitch (ANF) expects 2026 sales growth of 3% to 4%, down from 5% to 6% previously.
- Tariff costs on imported goods are projected to increase by 12% to 18% year-over-year.
- Gross margins may decline by 150 basis points due to supply chain expenses.
- Shipping and logistics costs rose 7% in the latest reporting period.
- ANF plans $180 million in digital and store investments in 2026.
- S&P 500 Consumer Discretionary Index (XLY) has declined 2.3% over the past quarter.
Abercrombie & Fitch (ANF) announced revised expectations for fiscal 2026, projecting a sales growth rate of 3% to 4%, down from prior estimates of 5% to 6%. The company attributed the downward revision to persistent tariff impacts on imported inventory, particularly from China and Southeast Asia, where import duties have increased by 12% to 18% year-over-year. These costs are expected to reduce gross margins by approximately 150 basis points in the upcoming fiscal year. The company’s guidance comes amid broader headwinds for the retail sector, with the S&P 500 Consumer Discretionary Index (XLY) showing a 2.3% decline over the past quarter. Competitors in the apparel space, including those tracked by the Nasdaq Retail ETF (XLK), are reassessing pricing strategies and sourcing models to mitigate cost inflation. Abercrombie cited a 7% increase in shipping and logistics expenses, driven by rerouting supply chains and compliance with new trade regulations. Despite the outlook, ANF plans to maintain its capital allocation strategy, investing $180 million in digital infrastructure and store modernization. The company also expects operating income to grow by 1% to 2% in 2026, reflecting cost discipline and targeted inventory management. However, analysts note that sustained tariff pressure could limit future margin expansion unless sourcing diversification accelerates. The revised guidance has prompted modest market reaction, with ANF shares down 2.1% in after-hours trading. The broader retail sector, particularly mid-tier apparel names, is now under increased scrutiny for pricing resilience and supply chain agility.