New Albany, Ohio – Abercrombie & Fitch reported a 20% increase in sales on Tuesday, exceeding expectations and indicating a strong back-to-school shopping season for the retailer. The company’s sales growth was attributed to both its namesake brand and Hollister, marking a substantial turnaround from years of stagnation. Additionally, the company raised its outlook, defying an overall slowdown in the apparel industry.
Despite the impressive sales figures, Abercrombie’s stock fell over 5% in premarket trading, although it had risen by 215% for the year up to that point. In its fiscal third quarter, the company exceeded Wall Street’s expectations for earnings per share and revenue, reporting $1.83 per share against an expected $1.18, and $1.06 billion in revenue against an expected $981 million.
Abercrombie’s net income for the three-month period was $96.2 million, or $1.83 per share, a significant improvement from a loss of $2.21 million, or 4 cents per share, the previous year. The company also saw a rise in sales to $1.06 billion from $880 million year-on-year.
Looking ahead to the holiday quarter, Abercrombie expects net sales growth to be up by low double-digits compared to the previous year, in line with analysts’ expectations. The company also anticipates an operating margin in the range of 12% to 14%, driven by factors such as a higher gross profit rate, lower freight costs, and higher sales prices.
During the quarter, Abercrombie witnessed sales at its namesake brand grow by 30% to $548 million and revenue at Hollister grow by 11% to $509 million, while same store sales were up 16% across both brands. CEO Fran Horowitz expressed confidence in the company’s ability to continue delivering for its customers and drive profitable growth, leading to an increase in the full-year outlook for net sales growth and operating margin.
Abercrombie’s transformation in recent years has been instrumental in its success, with the company rebranding itself into a more inclusive retailer with a product assortment that resonates with consumers. This shift has contributed to the company’s remarkable performance and outlook for the future.
In summary, Abercrombie & Fitch’s third fiscal quarter exceeded expectations, with a significant increase in sales and a positive outlook for the holiday quarter and the full year. CEO Fran Horowitz credits the company’s transformative efforts for its success and confident outlook.