Abercrombie & Fitch facing tariff-related headwinds in Q1 – analyst

As Wall Street braces for a flurry of retail earnings this week, Raymond James analyst Rick Patel warns Abercrombie & Fitch (NYSE:ANF) investors to brace for tariff-related headwinds and the possibility for sales to slow for the first time in eight quarters.

Citing industry metrics including store traffic, online promotions, and Google Trends, Patel sees early signs that the brand faced declines from the previous quarter while promotions were up sequentially, both of which could pressure the company’s gross margins.

While the latest quarterly results could disappoint, the stock has already retreated 51% year-over-year, which suggests most of the bad news tied to the company’s exposure to tariffs is already priced in.

With established levers of growth and margin expansion, Patel maintains his Outperform rating on Abercrombie & Fitch (NYSE:ANF), eyeing the current stock price as an attractive entry point if the results match expectations, but lowered his price target to $90 from $110 to reflect the more cautious outlook and deterioration in the stock price over the past 6 months.

Abercrombie & Fitch (NYSE:ANF) – which reports before the open on Wednesday — is expected to report an adjusted profit of $1.37 per share on $1.06B in sales. This compares to the same quarter last year, in which the company earned a profit of $2.14 on $1.0B in sales. Over the past three months, earnings estimates have been lowered 6 times and up only 3 times. Revenue estimates have been lowered 8 times, with no upward revisions.

Last quarter, Abercrombie & Fitch (ANF) beat both the top- and bottom-line expectations but issued cautious profit guidance, leading to a 17% retreat in the stock price.