Abercrombie & Fitch Co. (ANF) spent much of the past decade trying to become a different kind of retailer, one that could shed a brand identity that had grown stale and, at times, genuinely unwelcoming.
Its logo-driven look and exclusionary marketing from the 2000s made it a brand a certain generation actively avoided, Business of Business noted. It took years of rebuilding product, marketing, and store experience before shoppers gave it a second look.
This past quarter offered the clearest evidence yet that some of them have.
Comparable sales at the Abercrombie brand rose 4%, its first real return to growth after roughly a year of declines, according to a Morgan Stanley note shared with TheStreet.
Brand sales climbed 8% to $596.8 million, according to the company’s earnings release, adding evidence that the improvement in customer demand is translating into actual purchases.
Investors noticed quickly. Shares jumped 36% on Wednesday, Aug. 26, their biggest one-day move since November 2025, after fiscal second-quarter results beat expectations across the board, according to Bloomberg.
But the more interesting questions sit with the shopper, not the stock price: What actually changed, and can it last?
Related: Abercrombie’s stock exploded, but 1 number changes the story
What Abercrombie was trying to fix
Abercrombie’s problem was never simply that people stopped buying clothes. The retailer needed to become relevant to shoppers who were not attached to its old identity, while retaining the recognition that had made the brand valuable in the first place.
That reinvention has leaned on newer product categories, broader marketing, and partnerships such as the company’s tie-in with the NFL, according to the earnings release.
The company is also expanding through new distribution channels, giving shoppers more ways to encounter and buy the brand. That matters because a successful retail comeback requires more than getting former customers back. It requires creating new reasons for people to choose the brand in the first place.
The numbers behind the customer signal
Hollister, the company’s other brand aimed at younger teen shoppers, told a messier story. Comparable sales fell in the low single digits, though sales still grew 2% to $669.9 million, according to the earnings release.
Morgan Stanley said easing year-over-year comparisons give the brand room to improve into the fall.
What stood out most to Morgan Stanley was not the sales growth but the margins. The bank’s note said gross margin performance and management commentary suggested promotional pressure eased across both brands, an encouraging sign for a retailer trying to rebuild demand without sacrificing profitability.
Operating margin came in near 20%, although the company said the approximately $100 million IEEPA tariff refund contributed 790 basis points to the reported margin.
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Abercrombie management says demand is continuing
Chief Executive Fran Horowitz told WWD that “the customer is really voting for us,” and said the momentum had carried into the current quarter.
That lines up with the company’s own guidance, which calls for third-quarter sales growth of 5% to 6% and a full-year earnings forecast raised to $13.10 to $13.60.
Management also pointed to new growth opportunities across partnerships, distribution channels, and product categories, giving Abercrombie more ways to reach customers as it continues rebuilding the brand.
Wall Street raised its target, not its confidence
Morgan Stanley raised its price target on Abercrombie to $134 from $87, a 54% increase, it said in the note.
It kept its rating at Equal-weight, meaning the firm does not expect the stock to outperform its retail coverage group over the next 12 to 18 months.
More Retail:
- Home Depot is making a big bet on cautious consumers
- Another state just banned a controversial retail pricing practice
- JPMorgan just flagged a slow-building food crisis
That combination points to the tension under the Aug. 26 rally. Abercrombie’s stock closed at $147.75, already above Morgan Stanley’s new target, and roughly 9% of its float remains sold short, according to Bloomberg, a sign some investors are still betting the rally will not hold.
The bank believes near-term sales and margin trends genuinely improved. It does not believe the medium-term earnings debate has been resolved.
Abercrombie’s Q3 looks favorable, but Q4 is the real test
Analyst Alex Straton wrote that the third quarter looks “well set up for further upside,” supported by easy comparisons and a beatable sales bar.
Visibility fades once the fourth quarter begins, the note said, since the bank has limited clarity on how margins will trend into the holidays and whether Hollister’s momentum holds once back-to-school spending fades.
That progression matters. A strong quarter followed by an easy quarter does not by itself settle the more difficult question of whether the comeback survives once conditions stop cooperating.
Abercrombie has not proven its comeback simply by beating one quarter’s guidance, and a meaningful share of this quarter’s profit came from a one-time tariff refund rather than the underlying business.
The real test comes when those financial cushions disappear and Abercrombie has to survive the Christmas shopping season entirely on its own merits.
Whether the shopper who came back this summer is still choosing Abercrombie in December is the question even Morgan Stanley is not ready to answer.
Related: Target quietly finds a way to bring shoppers back
