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Abercrombie & Fitch (ANF +17%) is bouncing back in a big way. The stock has been under pressure in recent months, fueled by very weak back-to-back guidance announcements on January 13 and again in early March. Investors were pleased to see upside results for Q1 (Apr) and in-line revenue guidance for Q2 (Jul) although EPS guidance was weak. It was a similar story for FY26 with lowered EPS guidance, but at least revenue guidance ticked higher to +3-6% from +3-5%.

• Also, its mall-based peer American Eagle (AEO) withdrew guidance on May 14. So, there was definitely some nervousness heading into this report. And while not a great result, the key takeaway is that this report was better than feared. Investors are taking this report as a win in light of the recent ugly guidance.
• ANF saw sales growth across all regions in Q1, with the Americas up 7% on good traffic levels in both stores and digital and this is despite lapping a very robust Q1 last year when regional sales grew 23%. In EMEA, sales grew 12% on top of 19% growth last year with continued strength in the UK and Germany. In APAC, sales grew 5% on top of 10% growth last year, with nice comps in China.
• Same store comps came in at +4%, which was decent but not great. Comps were clearly led by its Hollister brand at +23% vs -10% for its namesake Abercrombie brand. This compares to +24% and +5% in Q4. This was Hollister's eighth consecutive quarter of comp growth. Both AUR and units were up in Q1 and growth was balanced across genders and categories. ANF is excited about Hollister ahead of the summer season.
• At its Abercrombie Brand, results fell short of expectations with comps at -10%. In fairness, Abercrombie was lapping a huge +29% comp last year. Another factor was that Abercrombie was moving through its winter carryover inventory. It also saw softer results in some of the spring categories that produced standout growth in Q1 last year. The brand continues to see good traffic trends.

While ANF's Q1 report and guidance did not blow us away, sentiment was so low coming into this report that a Q1 beat and in-line guidance was seen as a win. That is even despite downside EPS guidance. On a final note, and something to not be overlooked, ANF was a busy buying back stock in recent months with the stock under pressure. In Q1, it repurchased 2.6 mln shares for $200 mln, representing 5% of shares outstanding. That is a huge amount in one quarter and tells us management saw its stock price as undervalued.