ABERCROMBIE & FITCH CO /DE/

The estimated basis point (“BPS”) change disclosed throughout this Results of Operations has been rounded based on the change in the percentage of net sales.

Net sales

Net sales by segment are presented by attributing revenues to a physical store location or geographical region that fulfills the order. The Company’s net sales by reportable segment for Fiscal 2025 and Fiscal 2024 were as follows:

(1)Comparable sales are calculated on a constant currency basis. Refer to“NON-GAAP FINANCIAL MEASURES,” for further details on the comparable sales calculation.

For Fiscal 2025, net sales increased 6%, as compared to Fiscal 2024. The increase was primarily attributable to low-single-digit AUR growth and mid-single-digit unit volume growth, with increases in Company owned and operated stores, and digital channels. The year-over-year increase in net sales reflects positive comparable sales of 3%, as compared to Fiscal 2024. On a geographic basis, net sales for Fiscal 2025 were as follows:

•Net sales growth in the Americas region of 7% and 4% on a reported and comparable sales basis, respectively. The increase was led by mid-single-digit unit volume growth, with increases in Company owned and operated stores, and digital channels.

•Net sales growth in the EMEA region of 6% and flat on a reported and comparable sales basis, respectively. The increase on a reported basis was attributable to mid-single-digit AUR growth, favorable foreign currency and an increase in sales volume in net new stores, and third-party channels, offset by relatively flat unit growth.

•Net sales growth in the APAC region of 5% on a reported basis and a decline of (3)% on a comparable sales basis. The increase on a reported basis was attributable to mid-single-digit AUR growth, and low-double-digit increase in digital channels, partially offset by a low-single-digit decline in Company owned and operated stores. Sales growth was negatively impacted by low-single-digit unit volume decline with declines in Company owned and operated stores, partially offset by unit volume growth in digital channels.

The Company’s net sales by brand for Fiscal 2025 and Fiscal 2024 were as follows:

(1)Comparable sales are calculated on a constant currency basis. Refer to“NON-GAAP FINANCIAL MEASURES,” for further details on the comparable sales calculation.

Cost of sales, exclusive of depreciation and amortization

For Fiscal 2025, cost of sales, exclusive of depreciation and amortization, as a percentage of net sales, increased approximately 270 basis points as compared to Fiscal 2024. The percentage increase was primarily attributable to cost of sales deleverage with higher AUC primarily related to $90 million or 170 basis point adverse net tariff impact and unfavorable product and channel mix, partially offset by a low-single-digit increase in AUR, driven by volume mix and targeted promotions compared to Fiscal 2024.

Selling expense

(1)Refer to “NON-GAAP FINANCIAL MEASURES,” for further details.

For Fiscal 2025, selling expense increased by $120 million compared to Fiscal 2024. Selling expense, as a percentage of net sales increased 20 basis points as compared to Fiscal 2024. The increase in rate was primarily driven by an approximate 80 basis point increase in store occupancy and payroll costs and an approximate 40 basis point increase in marketing, partially offset by an approximate 80 basis point benefit resulting from the Litigation Settlement and approximately a 20 basis point benefit in fulfillment expense. Excluding 80 basis points of benefits related to the Litigation Settlement, adjusted non-GAAP selling expense as a percentage of net sales increased by approximately 100 basis points during Fiscal 2025, as compared to Fiscal 2024.

General and administrative expense

(1)Refer to “NON-GAAP FINANCIAL MEASURES,” for further details.

For Fiscal 2025, general and administrative expense decreased by $25 million compared to Fiscal 2024. General and administrative expense, as a percentage of net sales, decreased 140 basis points as compared to Fiscal 2024. The decrease in expense rate was primarily driven by an approximate 150 basis point decrease in employee compensation costs, partially offset by approximately 10 basis points in legal fees relating to the Litigation Settlement and other administrative expenses. Excluding 10 basis points of legal fees related to the Litigation Settlement, adjusted non-GAAP general and administrative expense as a percentage of net sales during Fiscal 2025, decreased by approximately 150 basis points, as compared to Fiscal 2024.

Other operating loss (income), net

For Fiscal 2025, other operating loss (income), net, as a percentage of net sales, increased by 20 basis points as compared to Fiscal 2024, primarily due to $7.3 million foreign currency losses recognized in Fiscal 2025 compared to $2.7 million in foreign currency gains in Fiscal 2024 .

Operating income

(1)Segment operating income as a percentage of net sales is calculated by attributing the segment’s operating income with the respective net sales in the segment.

For Fiscal 2025, operating income decreased by $42 million or 170 basis points, as a percentage of net sales, as compared to Fiscal 2024.

•Operating income for the Americas decreased $23 million and decreased 240 basis points as a percentage of segment net sales as compared to Fiscal 2024. The decrease as a percent of sales was primarily attributed to higher cost of sales, inclusive of tariffs, and deleverage on marketing investments, partially offset by leverage in fulfillment expenses and a benefit from the Litigation Settlement included in selling expense.

•Operating income for EMEA decreased $18 million or 310 basis points as a percentage of segment net sales as compared to Fiscal 2024. The decrease as a percent of sales primarily related to deleverage on fulfillment expenses and marketing investments.

•Operating (loss) for APAC increased $16 million or 950 basis points as a percentage of segment net sales as compared to Fiscal 2024. The increase as a percent of sales is primarily attributed to higher cost of sales, and deleverage on store occupancy expenses, partially offset by leverage on general and administrative expenses.

•Operating (loss) not attributed to segments decreased primarily related to a decrease in employee compensation costs, partially offset by increases in other administrative expenses and foreign currency losses.

Excluding the benefits related to the Litigation Settlement, adjusted non-GAAP operating income as a percentage of net sales decreased by approximately 250 basis points during Fiscal 2025, as compared to Fiscal 2024.

Interest (income) expense, net

For Fiscal 2025, interest (income) expense, net, decreased $6.2 million, as compared to Fiscal 2024. The net decrease was a result of a reduction in interest income due to the decrease in balance of time deposits and money market accounts compared to Fiscal 2024. This was partially offset by lower interest expense in Fiscal 2025 compared to Fiscal 2024 as a result of the redemption of the remaining outstanding balance of the 8.75% Senior Secured Notes on July 15, 2024.

Income tax expense

(1)The tax effect of pre-tax excluded items is the difference between the tax provision calculation on a GAAP basis and on an adjusted non-GAAP basis. Refer to “NON-GAAP FINANCIAL MEASURES” for details of pre-tax excluded items.

The change in the effective tax rate for Fiscal 2025, as compared to Fiscal 2024, is due to jurisdictional mix, a lower tax benefit on share-based compensation compared with the prior year.

During Fiscal 2025 and Fiscal 2024, the Company did not recognize income tax benefits on $74.9 million and $53.8 million, respectively, of pre-tax losses, primarily in Switzerland, resulting in adverse tax impacts of $11.9 million and $8.2 million, respectively. The primary driver relates to expense deleverage within the APAC and EMEA regions.

Refer to Note 12, “INCOME TAXES,” for further discussion on factors that impacted the effective tax rate in Fiscal 2025 and Fiscal 2024.

Net income attributable to A&F

(1)Excludes items presented above under “Operating income,” and “Income tax expense.” Refer to “NON-GAAP FINANCIAL MEASURES,” for further details.

Net income per diluted share attributable to A&F

(1) Excludes items presented above under “Operating income,” and “Income tax expense.”

EBITDA and adjusted EBITDA

(1)EBITDA and Adjusted EBITDA are supplemental financial measures that are not defined or prepared in accordance with GAAP. EBITDA is defined as net income before interest, income taxes and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for excluded items.