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ANF is trading sharply lower after issuing underwhelming Q4 (Jan) guidance, disappointing investors who were positioned for a stronger holiday-quarter upside following an impressive Q3.

• Q4 EPS guidance was narrowed to $3.50-3.60 from $3.40-3.70, which now sits slightly below Street expectations and removes hopes for a meaningful upside quarter.
• Revenue growth guidance was also narrowed to around 5% from 4--6%, disappointing analysts who were skewed toward the higher end of the prior range.
• Investor sentiment was negatively impacted given elevated expectations after Q3 EPS came in at the high end, raising hopes for a robust holiday performance.
• The company increased full-year capex guidance to ~$245 mln from ~$225 mln, suggesting higher investment needs to sustain growth.
• ANF reaffirmed Q4 operating margin guidance of ~14%, following a high-end margin performance in Q3.
• By brand: Hollister delivered a strong holiday season and is positioned for mid-teens sales growth in FY25. Abercrombie brand saw strong holiday customer response and now expects low single-digit sales growth in Q4, lapping a record prior-year comparison.

Briefing.com Analyst Insight:

ANF's Q4 guidance was not outright weak, but it fell short of elevated investor expectations that had built after a standout Q3. The narrowing of both EPS and revenue guidance effectively capped upside potential, which is problematic for a stock that had been priced for continued positive surprises. The higher capex outlook, while not alarming in isolation, raises some concern that incremental investment is required to sustain growth momentum. Reaffirmed margins provide some stability, but without clear upside drivers for Q4, sentiment is likely to remain pressured in the near term.