ABERCROMBIE & FITCH CO /DE/

Focus areas for Fiscal 2025

The Company introduced the Always Forward Plan in June 2022. The Always Forward Plan is anchored on our strategic growth principles, which are to:

•Execute focused growth plans;

•Accelerate an enterprise-wide digital revolution; and

•Operate with financial discipline.

While the Company has significantly outperformed certain financial targets set forth in the Always Forward Plan, the growth principles continue to serve as a framework for the Company achieving sustainable and profitable growth.

The Company’s strategic priorities continue to evolve based on changing consumer demands and new strategic opportunities, and management reviews and prioritizes investments and strategic focus areas to address such demands and opportunities.

The Company’s focus areas for Fiscal 2025 are to:

Execute focused growth plans by:

•driving sales growth across regions and brand families primarily through marketing and store investments in our owned and operating channels, while pursuing new geographies and markets via franchise, wholesale and licensing partnerships;

•using our regionally relevant brand playbooks globally to align the brands’ products, voices, and experiences with customers, both digitally and in-store; and

•using testing and chase strategies to deliver compelling assortments and product collections across genders.

Accelerate an enterprise-wide digital revolution to improve the customer and associate experience by:

•continuing to progress on our multi-year enterprise resource planning (“ERP”) transformation and cloud migration journey; and

•investing in digital and technology to improve experiences across key parts of the customer journey while delivering a consistent omnichannel experience.

Operate with financial discipline by:

•using our agile inventory model and pricing strategies to position the Company to support customer demand throughout the year; and

•maintaining our durable balance sheet and consistent free cash flow profile, underpinned by our disciplined investment philosophy while balancing against macro environment impacts and efficiency efforts.

Current macroeconomic conditions and tariffs

Macroeconomic conditions, such as a volatile interest rate environment, ongoing inflation, the geopolitical landscape, and foreign exchange rate fluctuations continue to impact the global economy. In addition, recent changes in legislative and regulatory developments, including enacted and proposed tariffs and other trade policies, have introduced additional uncertainty in the global economy and impacted our business and operations. For example, during Fiscal 2025, the U.S. announced a new universal baseline tariff on all U.S. imports, plus additional country-specific tariffs for select countries, including the countries from which we source a predominant portion of our merchandise, including Vietnam, Cambodia, and India. As a result, certain countries have imposed retaliatory tariffs on U.S. exports. The U.S. has reached trade agreements with certain countries, however U.S. tariff rates on imports from certain other countries remained subject to ongoing trade negotiations as of the date of this filing. It is also possible that further tariffs may be introduced or increased, or that existing tariffs may further change, resulting in continued uncertainty regarding the future of global trade relations. Additionally, recent court rulings bring additional uncertainty regarding the enforceability of the aforementioned tariffs. These continued uncertainties could disrupt our ability to procure, and/or result in increases to the cost of merchandise sourced from impacted countries. Uncertainties regarding tariffs, together with geopolitical tensions, may affect our business and operations or could lead to weakened business conditions for our industry. With continued uncertainty surrounding the geopolitical and trade environment, we continue to evaluate the impact of tariffs and other trade policies on our business and are continuing to build our playbook of mitigation strategies. Current mitigation strategies include evaluating supply chain footprint changes, negotiating with our supply chain vendors, pursuing operating expense reductions and determining ways to increase average unit retail (“AUR”) primarily through lower promotions and lower clearance selling. Assuming the estimated impact from the tariffs on goods imported into the U.S. based on with trade policies as of August 25, 2025, and factoring in certain planned mitigation strategies, we expect to incur approximately $90 million of net tariff expense, or 170 basis points as a percent of net sales, which will correspondingly negatively impact our operating profit in Fiscal 2025.

Further, in periods of perceived or actual unfavorable economic conditions, consumers may reallocate available discretionary spending or determine that they have fewer funds available for discretionary spending, which may also adversely impact demand for our products. Continued inflationary pressures could further impact expenses and have a long-term impact on the Company as increasing costs may impact its ability to maintain satisfactory margins.

Global events and supply chain disruptions

As a global multi-brand omnichannel specialty retailer, with operations in North America, Europe, the Middle East, and Asia, among other regions, management is mindful of macroeconomic risks, global challenges and the changing global geopolitical environment. The global supply chain also continues to be negatively impacted by various factors, including disruptions in major maritime routes, higher operational costs, and increased competition for supply chain availability due to uncertainty regarding tariffs and trade policy. In the past, the Company has taken certain mitigating actions in response to these disruptions, including increasing air freight usage where appropriate and prioritizing critical orders earlier to allow for longer lead times. During times of supply chain disruption, the Company may elect to pull forward product calendars which limits the effectiveness of our inventory chase model. Further mitigating actions may be needed and could result in higher freight costs in the near-term and beyond.

Management continues to monitor global events and assess the potential impacts that these and similar events may have on the business in future periods. Although management also develops and updates contingency plans to assist in mitigating potential impacts, it is possible that the Company’s preparations for such events are not adequate to mitigate their impact, and that these events could further adversely affect its business and results of operations.

Global store network modernization and growth

The Company has a goal of finding the right size, right location and right economics for omni-enabled stores that cater to local customers. The Company continues to use data to inform its focus on aligning store square footage with digital penetration, and has delivered new store experiences across brands during Fiscal 2025.

Through the end of the second fiscal quarter, the Company opened 26 new stores, remodeled 16 stores and right-sized five store, while closing eight stores. As part of this focus, the Company’s store investment plan includes delivering approximately 40 net store openings during Fiscal 2025 consisting of opening approximately 60 new stores, while closing approximately 20 stores, pending negotiations with our landlord partners. Additionally, the Company expects approximately 40 remodels and rightsizes, during Fiscal 2025, pending negotiations with our landlord partners.

Future closures could be completed through natural lease expirations, while certain other leases include early termination options that can be exercised under specific conditions. The Company may also elect to exit or modify other leases, and could incur charges related to these actions.

Recent Tax Law Changes

On July 4, 2025, House Resolution 1, also known as the One Big Beautiful Bill Act (“OBBBA”), was signed into law. The OBBBA includes, among other provisions, changes to U.S. corporate income tax law impacting the taxation of domestic and international business operations, including permanently extending certain expiring provisions of the Tax Cuts and Jobs Act, restoration of accelerated depreciation on capital expenditures, deductible research and experimental expenditures, and modifications to the international tax framework. The enactment of the OBBBA did not have a material impact on the consolidated financial statements and disclosures.

Pillar Two Model Rules

In 2021, the Organization for Economic Cooperation and Development (“OECD”) released Pillar Two Global Anti-Base Erosion model rules (“Pillar Two Rules”), designed to ensure large corporations are taxed at a minimum rate of 15% in all countries of operation. Although the U.S. withdrew from the OECD’s global tax agreement in January 2025, other countries where the Company does business, including the U.K. and Germany, have enacted legislation implementing Pillar Two Rules, which are effective from January 1, 2024. The implementation of Pillar Two Rules in each jurisdiction in which the Company operates did not have a material impact on the Company’s effective tax rate for Fiscal 2024, and the Company does not project a material impact on the effective tax rate for Fiscal 2025. The Company will continue to evaluate the impact as additional jurisdictions enact legislation and provide further guidance.

For a discussion of material risks that have the potential to cause our actual results to differ materially from our expectations, refer to Part I, “Item 1A. Risk Factors” on the Fiscal 2024 Form 10-K.

Summary of results

The following provides a summary of results for the thirteen and twenty-six weeks ended August 2, 2025 and August 3, 2024:

(1)Discussion as to why the Company believes that these non-GAAP financial measures are useful to investors and a reconciliation of the non-GAAP measures to the most directly comparable financial measure calculated and presented in accordance with GAAP are provided below under “NON-GAAP FINANCIAL MEASURES.”

(2)Comparable sales are calculated on a constant currency basis and exclude revenue other than store and digital sales. Refer to the discussion below in “NON-GAAP FINANCIAL MEASURES,” for further details on the comparable sales calculation.

Certain components of the Company’s Condensed Consolidated Balance Sheets as of August 2, 2025 and February 1, 2025 were as follows:

Certain components of the Company’s Condensed Consolidated Statements of Cash Flows for the twenty-six-week periods ended August 2, 2025 and August 3, 2024 were as follows: