ABERCROMBIE & FITCH CO /DE/

Focus areas for Fiscal 2026

Over the last several years, A&F Co. has worked to successfully transform its brands, business and culture, while delivering on its financial commitments. As the Company looks forward, it’s focused on evaluating opportunities that continue to deliver sustainable, profitable growth. The Company expects to:

•Deliver Consistent Global Growth Across Brands by investing in owned-and-operated channels with the expectation of continued net sales growth, including through net new store openings, digital fulfillment, and marketing.

•Expand Channels and Categories by increasing net sales growth in new and select markets through the use of franchise, wholesale, and licensing partnerships. The Company also plans to expand into new, adjacent product categories that resonate with each brand’s target customer.

•Execute a Multifaceted Strategy that includes evaluating sourcing footprint, adjusting pricing or promotions, and expense reduction initiatives to stabilize product and operating costs in attempt to meaningfully mitigate external cost pressure, including near-term tariff impacts.

•Enhance and Modernize our Key Systems and Leverage Technology to support operational productivity and to improve the customer journey.

•Execute Financial Discipline to maintain double-digit operating margins and expand net income per diluted share.

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, changes in trade policy and related uncertainty, including enacted and proposed tariffs affecting countries from which we source a significant portion of our merchandise and raw materials, have created a dynamic and unpredictable trade environment that adversely impacted our business and operations during Fiscal 2025 and continues into Fiscal 2026.

During Fiscal 2025, changes in U.S. trade policy, including the imposition, modification, and rescission of certain tariffs, increased volatility in duties and raw material costs associated with merchandise sourced from certain countries and added complexity to our supply chain and sourcing processes.

On February 20, 2026, the U.S. Supreme Court held that IEEPA did not authorize the imposition of tariffs, striking down the 10% universal baseline tariff, as well as the country-specific tariffs. The Company is involved in litigation seeking refunds of IEEPA tariffs. The outcome and timing of resolution remain uncertain.

While certain tariffs have been struck down, modified, or replaced, other tariffs remain in effect, and additional tariffs have been imposed or proposed during Fiscal 2026. Additional, increased, or modified tariffs may be imposed without warning through various statutes and trade authorities. These changing tariff rates and shifting trade policies have created significant uncertainty for suppliers, consumers, and us. These continued uncertainties regarding the future impact of tariffs and global trade relations could lead to weakened business conditions for our industry and could adversely impact our ability to procure merchandise or result in increases to the cost of merchandise sourced from impacted countries.

The Company continues to evaluate the impact of tariffs and other trade policies on its business and is continuing to execute against our playbook of mitigation strategies. Mitigation strategies have included evaluating supply chain footprint changes, negotiating with our supply chain vendors, pursuing operating expense reductions, and determining ways to increase AUR.

After factoring in certain mitigation strategies, tariffs on goods imported into the U.S. under trade policies in effect through January 31, 2026 negatively impacted operating income by $90 million or 170 basis points as a percent of net sales, during Fiscal 2025. Assuming the estimated impact from the tariffs on goods imported into the U.S., including the impact of a 15% tariff on all U.S. imports (which, for purposes of our outlook, is expected to apply beginning February 24, 2026, and to remain in effect for the entirety of Fiscal 2026), and factoring in certain planned mitigation strategies, we expect to incur approximately $40 million of incremental impact compared to Fiscal 2025, or approximately 70 basis points as a percentage of net sales, which would negatively impact our operating income during Fiscal 2026.

Recently, the global markets have experienced fluctuations in fuel and other energy related costs, which could lead to greater uncertainty regarding the overall economic environment and consumer spending. During 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 adversely impact demand for our products. Continued inflationary pressures could further impact expenses and have a longer-term impact on our 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, we are exposed to global events and geopolitical developments, including armed conflicts in certain regions, that may adversely impact our operations. In addition to the impacts of tariffs discussed above, global supply chain conditions continue to be affected by other factors, including disruptions in major maritime routes, higher transportation and logistics costs, and increased competition for supply chain capacity due to uncertainty in the global trade environment and ongoing armed conflicts. For example, armed conflicts in the Middle East have contributed to elevated freight rates and longer transit times compared to historical levels, and prolonged or escalating conflicts could result in additional supply chain disruption, including higher energy and transportation costs (such as fuel related charges), shipping delays, or increased costs from using air freight instead of ocean freight to mitigate inventory delays.

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 and Fiscal 2024. Details related to these new Company owned and operated store experiences follow:

During Fiscal 2025, the Company opened 62 new stores, remodeled 47 stores, and right-sized 11 stores, while closing 22 stores. This compares with 65 new stores, 48 remodeled stores, 12 right-sized stores, and 41 closures during Fiscal 2024. 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.

Additional details related to Company owned and operated store count and gross square footage follow:

(1)The Americas segment includes North America and South America.

(2)The EMEA segment includes Europe, the Middle East and Africa.

(3)The APAC segment includes the Asia-Pacific region, including Asia and Oceania.

(4)This store count excludes temporary and franchise stores.

Recent tax law changes

On July 4, 2025, House Resolution 1, also known as the 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 of 2017, 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 Company’s consolidated financial statements and disclosures.

For a discussion of material risks that have the potential to cause our actual results to differ materially from our expectations, refer to“ITEM 1A. RISK FACTORS,”.

Summary of results

A summary of results for Fiscal 2025 and Fiscal 2024 follows:

(1) Refer to“RESULTS OF OPERATIONS” for details on excluded items. A reconciliation of each non-GAAP financial measure presented in this Annual Report on Form 10-K to the most directly comparable financial measure calculated in accordance with GAAP, as well as a discussion as to why the Company believes that these non-GAAP financial measures are useful to investors, is 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 Consolidated Balance Sheets as of January 31, 2026 and February 1, 2025 were as follows:

Certain components of the Company’s Consolidated Statements of Cash Flows for Fiscal 2025 and Fiscal 2024 were as follows: