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Abercrombie & Fitch Tumbled 20% on “Good” News — What Went Wrong?

Abercrombie & Fitch shares cratered nearly 20% after the company modestly narrowed its fourth-quarter guidance—despite what appeared to be continued operational strength. The retailer, which had become a Wall Street darling after delivering a record fiscal 2024 and three strong quarters in fiscal 2025, forecasted fourth-quarter net sales growth of 4% to 6% and EPS of $3.40 to $3.70. While this was only a tightening from a prior 4% to 6% sales growth range and $3.40 to $3.70 EPS range, the absence of upside left investors disappointed. What triggered the violent reaction wasn’t a deterioration in fundamentals but rather a confluence of heightened expectations for the holiday quarter, tough prior-year comparisons, sensitivity to promotional intensity and freight costs, and a valuation that had quickly reset to near-peak levels. The sharp drop underscores how fragile sentiment can be for a company with lofty expectations, even when guidance is effectively reaffirmed.