The news: Abercrombie & Fitch reported record revenues in Q2 as soaring demand among Gen Z teens for Hollister offset weakness at its namesake brand.

By the numbers:

• Net sales rose 7% YoY to $1.2 billion, marking the 11th-straight quarter of growth.
• Hollister sales jumped 19% YoY on both a net and comparable basis, which management attributed to strong back-to-school demand as well as healthy interest in summer collections.
• By contrast, Abercrombie’s net sales fell 5% YoY, while comparable sales slumped 11%.

Despite the Abercrombie brand’s slowdown—and an estimated $90 million hit for tariffs—the retailer raised its full-year sales outlook for the second quarter in a row, as well as the lower end of its profit guidance. The company now expects sales growth of 5% to 7%, up from its prior outlook of 3% to 6%.

Abercrombie’s recovery strategy: While CEO Fran Horowitz noted the Abercrombie brand’s global strength, the company is taking steps to ensure that it remains top of mind with shoppers. That includes a splashy new partnership with the NFL, which will feature several of the league’s top stars—including Christian McCaffrey and CeeDee Lamb—in Abercrombie campaigns and limited-edition designs.

The retailer also considerably expanded the reach of its Abercrombie Kids label worldwide via wholesale partnerships with retailers including Macy’s, Nordstrom, Dick’s Sporting Goods, and Galeries Lafayette. Those deals allow the company to build relationships with a new generation of shoppers, turning them into brand devotees who stick with Abercrombie for life.

Our take: Abercrombie is navigating the current environment as well as any retailer—especially one with considerable tariff exposure—could. While minimizing tariff costs remains a key priority, Abercrombie’s sharp focus on the fundamentals—delivering products that people want—will help guide it through uncertainty.

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