Telsey (Telsey Advisory): What are the merchandising drivers for 2026 you're most excited about, and how do you think about AUR growth relative to tariff price increases and their margin impact?
Horowitz cited confidence from surpassing $5 billion in revenue for the first time and three years of double-digit margins, with the chase model driving unexpected wins like Hollister's 15% growth. Ball said the outlook holds the 15% tariff throughout the year for ~$40 million (~70 bps) incremental impact, that Q1 carries a full 290 bps incremental tariff hit before neutralizing in Q3 and turning to a Q4 tailwind, and that spring pricing taken in late Q4 will ramp to give modest full-year AUR growth.
Jefferies (Tarlowe): How do you think about the right growth algorithm for Hollister, and its areas of success and opportunity?
Horowitz credited being dialed into the teen consumer, with Q4 winners in fleece, graphics and outerwear and a successful Taco Bell Cyber Monday collaboration; investments in new stores, remodels and marketing supported the eleventh consecutive quarter of growth, and early spring response is encouraging.
Jefferies (Tarlowe): Why is this ERP implementation being called out when prior ones weren't, and are the impacts acute or longer-lasting?
Ball explained the system being replaced is ~15 years old and built for a different business; prior costs were spread over a multi-year build, whereas the Q1 impact is a contained ~2-week go-live risk tied to temporary third-party and chase interruptions, with inventory already positioned in stores and the company in good shape by Q2.
JPMorgan (Boss): How are you managing Abercrombie's return to growth against Hollister's moderation, and what is normalized growth for the two brands?
Horowitz said the goal is to grow both brands each year, with mid-single-digit growth defining success, and that Q4's balanced growth across brands, regions and channels on top of records proves the operating model is working; spring acceptance and price increases are being well received.
JPMorgan (Boss): Can you break apart the drivers behind the revenue step-down from Q4 into Q1 and the back-half improvement?
Ball said the ~5% Q4 exit rate carries into 2026 and the step down to the 1-3% Q1 guide is essentially the couple-point ERP impact, with an otherwise consistent build; Lipesky added that store growth ramps in the second half, fueling back-half revenue.
Citi (Lejuez): Is the ERP impact throughout the quarter or still ahead, and what is the cadence versus quarter-to-date trends?
Ball said cadence is relatively consistent, the ERP hit is contained to a ~2-week period just starting with go-live, inventory is positioned to support Easter and spring break, and the ~100-200 bps quarterly impact is more a comp-to-non-comp compression from third-party flow than a significant sales decline in those weeks.
Citi (Lejuez): Can you update us on your sourcing base and any changes for fiscal 2026 to monitor tariffs by country?
Ball said the company sources from over 16 countries in a diversified network built over years, the approach is not changing but always evolving for speed, cost and quality, and that Middle East sourcing operations have seen no disruptions material to receipt plans underpinning the outlook.
Citi (Lejuez): What prompted the APAC strategic review and when will you report an outcome?
Horowitz said after three years of regional growth they believe in the long-term opportunity but are assessing the go-to-market approach across the region to ensure it best serves shareholders; Ball added it is early days with the process just getting started and updates will come as appropriate.
The Retail Tracker (Shapiro): Can you update us on licensing efforts in kids and whether EMEA/APAC go-to-market will include more wholesale?
Horowitz said the global kids licensing launch pleased them and created a halo for a brand many didn't know existed, with recent baby/toddler launch capturing customers from age zero; the company is entertaining licensing, wholesale and franchising to diversify the model. Lipesky added European retail differs from the U.S. and options include department stores, wholesale and eventual concessions, and Horowitz noted strong inbound interest in both brands.
The Retail Tracker (Shapiro): Once you anniversary 2025 tariff noise, can you rebuild product margins or is this the new normal?
Ball said the company has maintained double-digit operating margins through supply-chain disruption, input inflation and now tariffs, and with great product and customer connection sees opportunity to grow AURs; the long-term goal is to offset as much tariff cost as possible, a process being worked toward with modest AUR growth in 2026.
UBS (Serna): What has consumer reaction to ticket increases been, and has quarter-to-date growth stayed consistent with Q4?
Horowitz said spring price increases were judicious and focused on fashion while holding price on denim and opening-price T-shirts, with a good initial response and a test-and-learn approach. Lipesky said the quarter started well across brands and regions after choppy late-January/early-February winter storms, with most volume still ahead and growth expected in Q1 aside from the one-time ERP headwind.
UBS (Serna): Is the Q1 freight tailwind based on contracted rates and does it persist, and how should SG&A look excluding marketing deleverage?
Lipesky gave Q1 building blocks: 290 bps incremental tariff headwind, ~160 bps freight tailwind (yes, based on contracted rates), slight AUR improvement, ~100 bps ERP headwind, and ~50 bps marketing headwind on timing (marketing roughly flat for the year as a percent of sales), with the rest of the expense base largely in line with last year's Q1.
Goldman Sachs (Keypour): How does the lapping of last year's carryover inventory drag factor into Q1 gross margin, and what does it imply for promotions?
Lipesky clarified the carryover drag was a 2024 Q1 dynamic and 2025 Q1 was already the normal base, so there is no major carryover mover; inventory is well positioned, units are up 2% excluding the ERP front-load, both brands are in chase position, and modest AUR improvement is baked in with a good promo position.
Goldman Sachs (Keypour): What separates the low end from the high end of the full-year guide?
Lipesky said it comes down to product execution, resonant marketing, consistent positive traffic and a great store experience; the 3-5% range reflects ranges of execution outcomes. Horowitz added the agile chase model is key to winning, citing Hollister's unplanned 15% as proof of the ability to respond to the customer in real time.
Raymond James (Patel): What are the building blocks of A&F growth, do you expect growth every quarter, and when do comps turn positive?
Horowitz said the full-year -1% was against the best year ever in 2024 and the brand is healthy, with continued investment in stores and marketing; Q4 strength came in fleece, outerwear and YPB with nice spring acceptance, and the expectation is to continue growing throughout 2026.
Raymond James (Patel): How are you planning units given price changes and potential demand elasticity?
Lipesky said units are in control, up 5% reported and up 2% excluding the ERP front-load, and will be kept tight and aligned with forward growth expectations while maintaining the ability to chase across both brands.
BTIG (Stichter): What are you seeing on conversion, particularly at Abercrombie and also Hollister?
Lipesky said conversion improved through the year at Abercrombie as teams stayed focused on the consumer and kept units in control to chase, with similar building improvement at Hollister reflecting confidence in the assortments, and they expect more of the same in 2026.
BTIG (Stichter): Is 12%-12.5% the right long-term margin level, and where would upside come from excluding tariff changes?
Lipesky declined to guide beyond 2026 but noted the model has delivered double-digit margins across freight, inflation and tariff environments; the business is highly cash generative with ~30% four-wall store margins, growing capital-light third-party capabilities, a strong balance sheet, and over $1.2 billion returned via buybacks since 2021, giving confidence in the model's durability and healthy long-term earnings growth.