Abercrombie & Fitch (ANF) Third Quarter 2023 Results

Abercrombie & Fitch.

Courtesy: Abercrombie & Fitch

Abercrombie & Fitch Tuesday beat estimates by posting a 20% rise in sales thanks to a strong back-to-school shopping season and growth at its namesake brand and Hollister.

The longtime mall retailer, which has rebounded after years of stagnation, also upgraded its outlook as it continues to defy the overall slowdown in the apparel industry.

The company’s shares fell more than 9% after markets opened, but rebounded after the earnings release and were up slightly in afternoon trading. Through Monday’s close, the stock was up 215% for the year.

Here’s how Abercrombie performed in its fiscal third quarter compared to what Wall Street expected, based on a survey of analysts by LSEG, formerly known as Refinitiv:

  • Earnings per share: $1.83 against $1.18 expected
  • Income: $1.06 billion versus $981 million expected

The company’s reported net income for the three months ended Oct. 28 was $96.2 million, or $1.83 per share, compared with a loss of $2.21 million, or 4 cents per share. , one year earlier.

Sales reached $1.06 billion compared to $880 million a year earlier.

For its fourth quarter, Abercrombie expects net sales growth to be up double-digits from a year earlier, which is in line with the 11.6% growth expected by analysts, according to LSEG.

It expects its operating margin to be between 12 and 14%, up from 7.7% last year and ahead of expectations of 11.3%, according to StreetAccount. The expected increase is due to a higher gross margin rate, lower transportation costs and higher sales prices.

For the full year, the company expects net sales growth of between 12 and 14 percent, up from previous guidance of around 10 percent and ahead of the 10.8 percent increase. expected by analysts, according to LSEG. It expects an operating margin of around 10%, up from its previous range of 8% to 9%, which analysts had expected, according to StreetAccount. The expected increase is due to lower transportation and raw material costs.

Abercrombie CEO Fran Horowitz told analysts the company had an “encouraging” start to the holiday shopping season. But its forecast for the quarter failed to impress Wall Street and was only in line with consensus estimates despite a strong quarter.

“Our teams have worked hard to align our products and promotional messaging to prepare us for a successful holiday across all brands,” Horowitz said on the call with analysts. “We are confident that our customers will love what we offer them this holiday season.

Horowitz added: “While the macroeconomic environment remains challenging and uncertain, we have proven that we can drive growth across brands and geographies if we remain focused on our customer and execute on our strategy. »

A similar dynamic was observed in its rival American Eagle, which also released its results Tuesday morning. While the mall retailer also beat expectations and raised its guidance, American Eagle’s holiday forecast failed to impress Wall Street, sending its shares tumbling.

During the quarter, Abercrombie saw sales of its namesake brand increase 30% to $548 million and Hollister’s revenue increase 11% to $509 million. Same-store sales increased 16% for both brands.

Abercrombie shares have soared this year as the company’s transformation continues to bear fruit. For years, Abercrombie was known for its designer T-shirts and jeans and shirtless male models, prompting critics to accuse the company of racism and exclusivity.

In the years since Horowitz took over the brand, Abercrombie has transformed into an inclusive retailer with an assortment of products that continues to resonate with consumers.

Read the full results publication here.

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