The refund was $100 million. The other part is why Abercrombie jumped 36 percent.

Abercrombie & Fitch Co. (NYSE: ANF) closed at $147.75 on August 26, 2026, up $38.85, or 35.67 percent, from Tuesday’s $108.90. A Reuters dispatch that morning said the New Albany, Ohio, retailer had raised its full-year sales forecast as apparel demand stayed resilient, and that the shares were up 11 percent before the open. That was the morning. It was not the session. Fiscal second-quarter sales were about $1.27 billion, up 5 percent. Diluted earnings were $4.17 a share. About $1.75 of that, and 790 basis points of the 19.9 percent operating margin, came from International Emergency Economic Powers Act tariff refunds.

Morning headlines could not agree on Abercrombie & Fitch.

A Reuters dispatch on August 26 said the New Albany, Ohio, retailer had raised its full-year sales forecast as apparel demand stayed resilient, and that the shares were up 11 percent before the open. That was the morning. It was not the session.

The New York Stock Exchange session closed at $147.75, up $38.85, or 35.67 percent from Tuesday’s $108.90. Yahoo Finance’s historical tape and CNBC both print that close. Wednesday opened at $131.37, traded as high as $154.58, and moved about 17.2 million shares, against a recent average nearer 1.5 million. That is not a rounding error. It is a re-rating in one sitting.

The question is what the market paid for.

The number that looks like a joke, until you split it

Abercrombie reported results for the quarter ended August 1, 2026, on the morning of August 26. The figures are unaudited. They were furnished, not filed, as Exhibit 99.1 to a Form 8-K under Item 2.02.

Net sales were $1.27 billion, up 5 percent from $1.21 billion a year earlier. The company called that a record second quarter and its 15th consecutive quarter of growth. Comparable sales were flat. Diluted earnings were $4.17 a share, against $2.91 a year earlier, or $2.32 if you use last year’s adjusted figure. Operating income was $253 million, or 19.9 percent of sales.

In May, the same company had told investors to expect an operating margin around 10 percent and diluted earnings of $1.80 to $2.00 a share. $4.17 against that range is the kind of print that makes a stock do what this one did, if you do not read the next sentence.

The company put the next sentence on the first page. It received and recognized about $100 million of International Emergency Economic Powers Act tariff refunds in the quarter. The full amount sits in cost of sales as a reduction. The company’s own table says that refund added 790 basis points to operating margin and about $1.75 to diluted earnings, using a 26 percent tax rate.

Abercrombie did not take the refund out of its non-GAAP earnings. GAAP and adjusted earnings for this quarter are the same $4.17. An Associated Press snapshot, built from Zacks data, called $2.42 an adjusted figure after non-recurring gains. That is someone else’s subtraction, not the company’s. The company’s subtraction is the $1.75 line.

Do that arithmetic and you get $2.42 a share, against a May outlook of $1.80 to $2.00. Do it on the margin and you get about 12.0 percent, against an outlook of around 10 percent. Operating income without the $100 million is about $153 million.

Fran Horowitz, the chief executive, did not hide the check. She said operating margin and earnings per share came in “above our outlook, in excess of the tariff refunds benefit.” That is the company’s claim, and the table is built to let you test it. The residual beat is real. It is also not $4.17.

Cost of sales falling to 28.9 percent of sales from 37.4 percent a year earlier is mostly that refund, plus a still-present tariff expense the company puts at about $15 million this quarter. Selling expense rose to 35.1 percent of sales from 31.1 percent. The business spent more to sell clothes. The refund did not do that work.

Abercrombie did the growing. Hollister is still bigger.

This is still the company a lot of people remember as a dark mall store with loud cologne and a shirt you were not supposed to button. The filing now reads like a modern apparel operator that grew sales for a 15th straight quarter, bought back 7 percent of itself, and told you on page one how much of the profit was a government refund.

The growth is not even.

Abercrombie brands sold $597 million, up 8 percent, with comparable sales up 4 percent. Hollister sold $670 million, up 2 percent, with comparable sales down 3 percent. Hollister is still the larger brand. Abercrombie is the one that moved. Both, the company said, posted record second-quarter sales.

Company comparable sales were flat. A 5 percent sales increase with a flat comp is a square-footage and mix story, not a same-store sprint.

Americas sales were $1.02 billion, up 5 percent, comps up 1 percent. Europe, the Middle East, and Africa rose 2 percent, to $202 million, with comps down 4 percent. Asia-Pacific rose 19 percent, to $44 million, with comps up 13 percent. APAC is the loud percentage on a small base. EMEA is the soft one.

Horowitz said growth was “balanced across our brands and regions, highlighted by accelerating momentum in the Americas and improving trends in EMEA.” Improving is not the same as strong. The EMEA comparable is still negative.

The company launched The Hollister Collection at Target on June 28. The second-quarter release does not break out what that collection sold.

The raise already has the rest of the refund in it

Full-year net sales are now expected to grow around 5 percent (May: 3 to 5). That sales raise does not come from the refund.

Diluted earnings now $13.10 to $13.60 (May: $10.20 to $11.00). Operating margin 14.5 to 15.0 percent (May: 12.0 to 12.5). New outlook includes about $120 million of IEEPA refunds for the full year, or around 220 bps and about $2.10 a share including interest. About $20 million remaining in Q3 (~160 bps / $0.35).

Rest-of-year assumed tariff rate on US imports lowered to an effective 10 to 12.5 percent, from 15. Share repurchases at least $500 million (was ~$450). Capex about $250 million (was $225). Store plan unchanged: about 50 openings, 20 closures, 80 remodels, about 30 net new owned stores.

Q3 guide: sales up 5 to 6 percent, OM 13 to 14 percent including leftover refund, EPS $2.90 to $3.20, at least $100 million more buybacks.

Cash, and what they did with it

Finished August 1 with $628 million cash and about $1.1 billion liquidity. Inventories $592 million vs $593 million LY. YTD OCF $313 million. Bought 2.0 million shares in the quarter for about $177 million, and 3.2 million YTD for $282 million — 7 percent of beginning shares. $568 million remains on the March 2025 authorization.

What to watch

The refund is mostly in. $100 million recognized, $20 million queued for Q3, year includes $120 million. Anyone treating $13.10 to $13.60 as clean operating needs to take about $2.10 back off. Company comps flat. Hollister comps -3%. EMEA comps -4%. Selling expense is up. First clean-ish quarter on the company’s schedule is Q4.