ABERCROMBIE & FITCH CO /DE/

16. CONTINGENCIES

On February 20, 2026, the U.S. Supreme Court ruling invalidated tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”), striking down the 10% universal baseline tariff, as well as the country-specific tariffs. On March 4, 2026, the U.S. Court of International Trade issued an order directing U.S. Customs and Border Protection to refund IEEPA tariffs that were previously collected.

The Company applied a gain contingency model in accordance with Accounting Standards Codification Topic 450, Contingencies, to account for potential refunds of previously paid IEEPA tariffs. Under this model, a gain contingency is not recognized in the condensed consolidated financial statements until the gain is realized or realizable. Any refunds, when recognized, would be reflected as a reduction of Inventories on the Condensed Consolidated Balance Sheet to the extent the related goods remain on hand, or as a reduction of Cost of sales in the Condensed Consolidated Statements of Operations and Comprehensive Income for amounts related to goods already sold.

During the thirteen weeks ended August 1, 2026, the Company recognized approximately $100 million in refunds plus accrued interest of $3 million of IEEPA tariffs previously paid. The refunds received were reflected as a reduction of cost of sales, with the accrued interest reflected in interest income in the Condensed Consolidated Statements of Operations and Comprehensive Income. Subsequent to August 1, 2026, the Company received approximately $18 million in refunds related to IEEPA tariffs, of which approximately $4 million had been recognized as a receivable as of the end of the second quarter of 2026. The remaining $14 million received will be reflected as a reduction of cost of sales in the third quarter of 2026, with accrued interest reflected in interest income, in the Condensed Consolidated Statements of Operations and Comprehensive Income.