Abercrombie & Fitch stock jumped 37% Wednesday after a $100 million tariff refund pushed quarterly earnings well past forecasts and drove a sharp increase in full-year guidance. Ross Stores and Kohl's booked the same refund mechanic in recent weeks but saw far smaller stock reactions, exposing how differently investors read identical windfalls against each retailer's underlying demand trend.
Abercrombie & Fitch stock surged 37% to $148.91 in mid-morning trading Wednesday after a large earnings beat, a $100 million tariff refund, and a raised full-year guidance. The SPDR S&P 500 ETF Trust stayed practically unchanged at $765.57, framing the move as an idiosyncratic repricing of the apparel name rather than a broader market swing.
Tariff refund drives an outsized earnings beat
Abercrombie reported adjusted earnings of $4.17 per diluted share, well above the $1.99 consensus and its own prior guide of $1.80 to $2.00. Its net sales rose 5% to $1.27 billion. The company booked a $100 million pre-tax IEEPA tariff refund as a reduction of cost of sales, contributing $1.75 per diluted share, and raised its full-year outlook to $13.10 to $13.60 per diluted share from a prior $10.20 to $11.00. As a result, 220 basis points of that margin upgrade trace directly to the refund.
Even so, operating margin came in at 19.9%, against 13.9% adjusted a year earlier — an improvement that holds up after backing out the one-time benefit. According to 24/7 Wall St.: CEO Fran Horowitz said operating margin and earnings per share beat guidance in excess of the refund itself.
Flat comps temper the rally
But the stock market reaction masks a tension inside the results. Companywide comparable sales were flat, and Hollister's comps declined 3%, so the sales growth is being carried by average unit price gains and new stores rather than by traffic through existing locations. The Abercrombie brand, however, returned to growth with 4% comparable sales, marking a return to positive comps at its namesake banner.
By region, Asia Pacific net sales grew 19% and Americas net sales grew 5%, while EMEA net sales rose 2%.
Peers post the same refund, different reactions
Ross Stores stock was down 0.5% to $240.09 Wednesday even though it collected its own tariff refund a week earlier — a catalyst already priced into shares that had climbed 34% year to date through Tuesday's close. Kohl's stock barely moved, up 0.4% to $17.75, despite reporting the same tariff-refund tailwind and raised guidance before the open, with investors appearing reluctant to reward the windfall against a still-declining top line.
What comes next
Abercrombie's next scheduled catalyst is its third-quarter report, where management guided to $2.90 to $3.20 in EPS on 5% to 6% sales growth. A 34% single-session move on a stock that was negative year to date invites profit-taking if comparable sales fail to turn positive next quarter.
Source: 24/7 Wall St.
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