Abercrombie & Fitch forecasts muted sales on tariff jitters, Middle East tensions

By Neil J Kanatt

March 4 (Reuters) – Abercrombie & Fitch on Wednesday forecast muted sales growth for the year and said it had factored a 15% U.S. tariff impact into its outlook, while also warning of a “slight sales hit” from the Middle East conflict.

Shares of the company, which operates around 17 of its stores in the United Arab Emirates and Kuwait, were down 7%.

Consumer companies, among the worst hit from President Donald Trump’s flip-flop on tariffs, are navigating the latest uncertainty after the U.S. Supreme Court struck down the earlier levies. The U.S. then started collecting a 10% uniform tariff but Treasury Secretary Scott Bessent has said a 15% rate is expected to take effect this week.

Last week, shoemaker Steven Madden withheld providing an annual profit forecast, while on Tuesday Swiss sneaker maker On Holding and U.S. electronics retailer Best Buy left the tariff impact out of their forecasts, even as they flagged that the effective rate remained lower than last year.

Abercrombie’s forecast now assumes a 70‑basis‑point tariff impact – roughly $40 million based on 2025 sales of $5.27 billion – excluding potential refunds from struck‑down duties, it said. In January, Abercrombie estimated about $90 million in tariff costs for 2025, or a 170‑basis‑point hit.

In the past year, Abercrombie has looked to diversify its supply chain to offset the tariff hit. It has also focused on selling its products at full price and reducing discounts, while catering to its core target audience of middle‑ to high‑income consumers.

“Abercrombie’s growth streak has been nothing short of phenomenal, but weakening momentum – particularly for its namesake brand – shows that the retailer is not immune to the pressures facing discretionary spending,” eMarketer analyst Rachel Wolff said.

The company said it would see a small tariff hit in the second quarter before pressures ease later in the year and eventually turn into a benefit as duties fall at the end of 2026.

Abercrombie now forecasts 2026 net sales to grow between 3% and 5%, compared with analysts’ expectations of a 4.2% rise, according to data compiled by LSEG. It expects annual net income per share to be between $10.20 and $11, the midpoint of which is above expectations of $10.36.

The company, which has over 830 stores around the globe, expects to add around 30 more in 2026.

(Reporting by Neil J Kanatt in Bengaluru; Editing by Maju Samuel)