Abercrombie & Fitch raised its annual profit forecast on Tuesday, betting on strong demand for its Hollister dresses and jackets as shoppers snap up in-trend apparel during the crucial holiday season.

The company’s shares surged nearly 18%, after it also forecast a strong holiday quarter and beat third-quarter estimates.

The clothing retailer, whose denim jeans sell for $100 on average, has benefited from a strong online presence and resilient spending among affluent consumers despite tariff-driven uncertainties.

“The company’s success is being driven by a sharp merchandising strategy and a consumer-centric focus, which have enabled it to maximize full-price sales and deepen customer engagement,” said Rachel Wolff, analyst with Emarketer.

Its Hollister brand posted a 15% like-for-like sales growth in the third quarter, helped by the onset of the fall season and strong performance during back-to-school sales. Hollister contributes to more than half of the company’s total sales.

“Like Gap and Levi Strauss, Abercrombie is benefiting from the denim boom — and is likely to continue doing so as shoppers focus their dollars on retailers that can offer them a compelling mix of style and affordability,” Wolff said.

Abercrombie’s partnerships with global brands such as Crocs and the NFL have also boosted its popularity.

Its Cyber Monday collaboration with Taco Bell is expected to bring in more shoppers to its stores, executives said on the post-earnings call.
For the fourth quarter, the retailer forecast sales to grow between 4% and 6% and profit in the range of $3.40 to $3.70 per share.

The company expects per-share net income for fiscal 2025 to be between $10.20 and $10.50, the midpoint of which is higher than its previous range of $10.00 to $10.50.

Rival Gap also beat quarterly comparable sales and profit estimates last week.

Abercrombie’s net sales rose 7% to $1.29 billion for the quarter ended November 1, compared with the $1.28 billion estimate, according to data compiled by LSEG.

Adjusted profit of $2.36 per share also topped expectations of $2.16.