Shifting consumer habits are reshaping the retail landscape, as spending patterns reveal unexpected winners and laggards in the marketplace. JPMorgan analyst Matthew R. Boss downgraded Abercrombie & Fitch Company ( ANF ) and Bath & Body Works, Inc. ( BBWI ) following its recent fieldwork and intra-quarter management access.

Consumer Spending Still Moderate: The analyst stated that, based on Chase Credit Card data, U.S. consumer spending rose 3.6% year over year in September, slowing from 4.7% in August and 4.4% in July, but still above the 3.4% six-month average from January through June 2025.

On a two-year stacked basis, spending grew 6.9% in September, compared with 7.4% in August and 6.3% in July.

Boss further adds that Apparel and footwear spending increased 4.6% year over year in September, down from 6.7% in August, yet slightly above the 4.3% first-half average.

On a two-year basis, growth held at 8%, about 240 basis points above the January–June trend.

Overall, consumer spending remains resilient, with July and August benefiting from easier year-over-year comparisons and back-to-school demand, writes the analyst. September growth stayed above pre-July averages, suggesting steady momentum.

ANF: The analyst downgraded the company from Overweight to Neutral, while maintaining a price forecast of $103.

Boss trimmed third- and fourth-quarter revenue estimates below consensus, with third-quarter revenue growth guidance cut to 3.9% Y/Y versus Street expectations of 6.2% and management guidance of 5%–7% growth.

Also Read: Denim Trend Boosts Abercrombie & Fitch Outlook

The analyst cited weaker-than-expected Abercrombie performance due to conversion and AUR pressure offsetting solid traffic gains.

Apart from this, the analyst now sees fourth quarter Abercrombie SSS down 7% (Street: –0.8%), as management's goal of returning to sales growth by year-end may shift to early 2026.

The analyst cut the third quarter EPS estimate to $1.95 (12% below Street at $2.20 and below management's $2.05–$2.25 guidance) and fourth quarter EPS forecast to $3.23 (~11% under Street's $3.64).

This implies FY25 GAAP EPS of $9.68 (vs. Street $9.85 and management's $10.00–$10.50 guidance) and non-GAAP EPS of $9.05, based on 5.1% revenue growth and 12.8% GAAP operating margins.

For FY26, Boss now sees EPS of $8.32 (20% below Street's $10.41), assuming 3.9% revenue growth and 10.0% operating margins, reflecting a 210-bps gross margin decline from tariffs rolling off in the second half of FY25 and flat expense leverage.

BBWI: The analyst downgraded the company from Overweight to Neutral, while maintaing a price forecast of $26.

The analyst trimmed the third-quarter revenue growth forecast to -0.6% Y/Y, about 210 bps below the midpoint of management guidance and 280 bps below the consensus estimate, reflecting weaker-than-expected sell-throughs across key product launches.

Boss slashed third quarter EPS estimate to $0.34 (20% below Street's $0.42 and below management's $0.37–$0.45 range) and fourth quarter EPS estimate to $2.03 (~10% under Street's $2.23).

Consequently, FY25 EPS now stands at $3.21 (vs. consensus estimate of $3.48; management $3.35–$3.60) based on 0.7% revenue growth and 15.9% operating margins.

Additionally, for FY26, the analyst lowered the EPS estimate to $3.38 (11% below the Street's $3.79), assuming 1.7% revenue growth and 15.7% margins.

Price Action: ANF shares are down 6.96% at $78.60, while BBWI shares are up 2.11% at $26.42 at the last check on Monday.

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