Shares of Abercrombie & Fitch Co. (ANF) plummeted 8.62% in pre-market trading on Wednesday, despite the company reporting better-than-expected second-quarter earnings. The sharp decline comes as investors focused on disappointing third-quarter guidance and concerns over significant tariff impacts.

For the second quarter ended August 2, Abercrombie & Fitch reported adjusted earnings of $2.32 per share, slightly above the analyst consensus of $2.30. Net sales rose 6.6% to $1.21 billion, also beating expectations of $1.20 billion. The company's Hollister brand performed strongly with a 19% sales increase, while the Abercrombie brand saw a 5% decline.

However, the positive Q2 results were overshadowed by several factors: 1. Third-quarter earnings guidance of $2.05 to $2.25 per share fell short of Wall Street's expectations of $2.51. 2. The company warned of a significant tariff impact, estimating approximately $90 million in tariff expenses for the full year, representing about 170 basis points as a percentage of net sales. 3. Despite raising its full-year sales growth outlook to 5-7% from 3-6%, investors seemed more concerned about the near-term headwinds. These factors combined to drive the stock's sharp pre-market decline, as traders reassessed the company's near-term profitability and growth prospects in light of the challenging macroeconomic environment.