Abercrombie & Fitch Company

Good day and thank you for standing by. Welcome to the Abercrombie & Fitch first quarter fiscal year 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today. Mo Gupta, VP of Investor Relations, please go ahead.

Thank you. Good morning and welcome to our first quarter 2026 earnings call. Joining me today on the call are Fran Horowitz, Chief Executive Officer, Scott Lopesky, Chief Operating Officer, and Robert Ball, Chief Financial Officer. Earlier this morning, we issued our first quarter earnings release, which is available on our website at corporate.abercrombie.com under the investor section. Also available on our website is an investor presentation. Please keep in mind that we will make certain forward-looking statements on the call. These statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions we mentioned today. These factors and uncertainties are discussed in our reports and filings with the Securities and Exchange Commission. In addition, we'll be referring to certain non-GAAP financial measures during the call. Additional details and reconciliations of GAAP to adjusted non-GAAP financial measures are included in the release and the investor presentation issued earlier this morning. With that, I'll hand it over to Fran.

Thanks, Mo, and thanks, everyone, for joining. I'm happy to report that, once again, we delivered against our commitments, growing net sales for the 14th consecutive quarter, setting a record Q1 despite headwinds in the Middle East and other select countries in the MAIA. On the bottom line, our first quarter results exceeded expectations on both operating income and earnings per share. We're seeing good progress against our company priorities so far in 2026, led by net sales growth across brands in the Americas and other key markets like the UK. We successfully launched our upgraded merchandising ERP, which will enable long-term channel and category expansion, and we continue to make strategic investments in marketing, digital, and stores to drive profitable growth. One quarter in, the team continues to stay agile in a dynamic global environment, and 2026 is shaping up to be another year of consistent progress. As we maintain our full-year outlook on net sales, operating margin, and earnings per share. Recapping the first quarter, we delivered record net sales of $1.1 billion on growth of 2% to last year in line with our expectations. Operating margin of 8% exceeded our plan, reflecting slightly lower tariff rates. Earnings per share of $1.47 was above our expected range, and we used our strong balance sheet to return $105 million to shareholders through share repurchases, totaling 3% of shares outstanding as of the beginning of the year. Regionally, the Americas grew 3%, with growth across brands on good traffic levels in both stores and digital. In EMEA, continued growth in the UK was more than offset by declines in the Middle East and other European markets as the regional conflict ramped up, driving EMEA sales down 10% for the quarter. The team has taken action by controlling receipts and dialing in promotions to align to the trend. In APAC, we grew 24% on top of 5% growth last year, and our strategic evaluation of the region is underway to ensure we fully capitalize on the large addressable market there. From a brand perspective, Abercrombie Brands delivered net sales growth of 3% for the quarter on flat comparable sales. We delivered positive AURs in the quarter on solid customer response to our spring assortment, along with consistent traffic and conversion levels to last year. In the Americas and the UK, we saw balanced growth across genders, with fleece denim and wovens performing well. We continue to find excellent collaboration partners to highlight Abercrombie's elevated lifestyle brand positioning. Most recently, we teamed up with Sperry to renew a relationship that was first established in the 1930s and a collection of footwear and apparel across both men's and women's product. The initial launch, which reflected the rich heritage of our brand that continues to connect with today's customers. It exceeds internal expectations and we're seeing higher than average conversion. We're in our fifth year of net store expansion for Abercrombie and we're developing our local experiences directly on scaled customer feedback. A great example is our new expanded Abercrombie & Fitch store opening in SoHo next week. We've operated a smaller format location on Broadway for the past three years, and it was clear from our traffic and sales data that our customer was looking for a broader assortment. This new store will be our best expression of the Abercrombie brand to date, and we're continuing to invest in other new stores across key markets to support long-term growth. At Hollister Brands, we continue to find opportunities to further our connection with teen customers growing nicely in the Americas and APAC. This was offset by the Middle East and European demand trend, resulting in flat net sales to last year's first quarter record and growth of 22%. In the Americas and APAC, we saw positive traffic across both stores and digital direct channels, along with slight AUR improvement. Graphic keys, shorts, swim, and other warm weather categories grew nicely as we transitioned to spring. With graduation season well underway here in the U.S., Hollister was excited to showcase Gigi Perez in her updated version of the iconic Green Day song, Time of Your Life. We featured the song and highlighted our gratis tournament across our digital marketing channels, celebrating this important milestone in our customers' lives. And with the upcoming World Cup, teams are looking for authentic fits to represent their team. Hollister has partnered with Coppa, the Italian sportswear brand, with a deep connection to international football on a collection of men's and women's pieces. We believe we have exactly what the Hollister customer needs for match days and watch parties, in addition to the casual wear we're known for. Now, turning to our 2026 priorities. In March, we outlined our focus areas for the year. First, to grow sales across brands with continued investments in owned and operated stores and digital businesses, while adding growth from partnerships and new product categories. Second, to stabilize gross margins by mitigating external cost pressures, including tariffs. Third, to continue to invest in tools and technologies, including AI, to improve our speed and efficiency across the product and customer journeys. And finally, to maintain our strong profitability by delivering double-digit operating margins and expansion earnings per share, which will fuel excess cash return to shareholders through share repurchases. We made solid progress on each of these in the first quarter. We're using our playbook in growth markets like the US and the UK, and we're there for our customers every day in all the places they want to shop. With investments in marketing, new stores, and digital, we're seeing the customer respond, leading to our record first quarter. As we shared in our March call, the team is closely monitoring developments in the Middle East, using our playbook and global operating models to remain agile. Sticking with our playbook, we're focused on what we can control, including our inventory levels and marketing investments, ensuring we can respond to what's happening in real time. Despite these EMEA headwinds, we expect total sales growth for second quarter, along with full year 2026, which would be our fourth consecutive year of net sales growth. Beyond net sales, we delivered modest year-over-year gross margin expansion in the first quarter as lower tariff rates and our mitigation efforts took hold. Our customers have responded positively to spring assortments, continuing to look to both Abercrombie and Hollister as leaders in the intersection of fashion and value for their respective demographics. We expect the team's extensive efforts to maintain our customer relationships while balancing costs will support growth margin stability. Our 2026 priorities are also about evolving our model. We're finding new ways to grow, adding new chapters to our playbook and strengthening our foundation. We're excited to find new categories to serve our customers, like we are with Abercrombie Baby and Toddler. We're also looking beyond our owned and operated channels, developing new franchise, wholesale, and licensing relationships that will allow us to reach even more customers. I have to commend our team on a successful ERP implementation in March. Sitting here on the other side of this incredible multi-year effort, we're all excited to see how our new technology will accelerate our abilities to onboard and support new global partners, channels, and geographies. Of course, we're also looking at how the buying process is evolving, particularly as AI advances, and we're testing new ways to bring our brands to those new chats, apps, and devices. Supported by our upgraded ERP, we have a modern digital foundation that will give us an advantage in leveraging data and insights with greater speed and impact. We're focused on continuing to develop these new capabilities to increase both quantity and quality of our customer relationships around the world. In summary, we started the year from a position of strength, delivering progress on both top and bottom lines. We remain confident in our plans and the growth opportunities ahead as we continue executing through 2026. we're tracking to another year of top line growth, double digit operating margins, expansion earnings per share, and strong cash flow, enabling us to target returning $450 million to shareholders this year via share repurchases. And with that, I'll hand it over to Robert.