Abercrombie & Fitch Co. reported a strong second quarter, sending shares up nearly 36% in one day, and Jim Cramer advised investors to buy on a pullback rather than chase the rally. The company posted net sales of $1.3 billion, up 5%, and diluted earnings per share of $4.17, compared with $2.91 a year earlier, with operating margin expanding to 19.9% from 17.1%. The earnings beat was partly driven by approximately $100 million in tariff refunds, which contributed $1.75 per diluted share and about 790 basis points to operating margin. Management raised full-year net sales growth guidance to 5% from 3%-5%, diluted EPS guidance to $13.10-$13.60 from $10.20-$11.00, and operating-margin guidance to 14.5%-15% from 12%-12.5%, while planning to repurchase at least $500 million of shares. However, comparable sales were flat overall, with Hollister down 3%, and the tariff benefits are not expected to be structural, so Cramer suggested waiting for a better entry point.
Abercrombie & Fitch CompanyStrong Q2 earnings beat with EPS $4.17 vs $2.91, raised guidance, and $500M buyback plan.
