The position of Abercrombie & Fitch is not going to be relinquished anytime soon.
Following another quarter of results that exceeded expectations and its sixth consecutive quarter of double-digit sales growth, the clothing manufacturer released solid Christmas guidance on Tuesday. Results did not seem to be impacted by the recent arrest of Mike Jeffries, the company’s former CEO, on sex trafficking charges.
Based on an LSEG survey of analysts, here is how Abercrombie performed in its fiscal third quarter in comparison to what Wall Street was expecting:
-
Earnings per share:
$2.50 vs. $2.39 expected -
Revenue:
$1.21 billion vs. $1.19 billion expected
Compared to $96.2 million, or $1.83 per share, a year earlier, the company’s reported net income for the three months ending November 2 was $131.98 million, or $2.50 per share.
Sales increased from $1.06 billion to $1.21 billion, a 14% increase from the previous year.
According to LSEG, Abercrombie anticipates sales growth of 5% to 7% for the crucial holiday shopping quarter, which is more than the 4.8% rise experts had anticipated. Instead of the 12% to 13% increase it had previously projected, the company is now anticipating a 14% to 15% increase in sales for the entire year. According to LSEG, that revised outlook is higher than the 12.1% rise analysts had anticipated.
Abercrombie’s stock fell almost 3% in premarket trade, even though the company’s projection was stronger than anticipated.
CEO Fran Horowitz expressed optimism in a news statement, omitting the worries she raised about the environment’s growing unpredictability in the previous quarter.
Using our regional playbooks and operational model, we continue to execute at a high level while experiencing broad-based growth across areas and brands. According to Horowitz, all of our regions experienced double-digit growth during the quarter, with the Americas expanding by 14%, EMEA by 15%, and APAC by 32%.
Comparable sales gains of 11% and 21% were reported by the Abercrombie and Hollister brands, respectively. Horowitz cited last year’s impressive results, which included 7% increase for Hollister and 26% growth for Abercrombie.
Abercrombie has grown to be one of the largest successes in the retail sector under Horowitz’s leadership. It continues to improve on the impressive performance it recorded the previous year.
Horowitz is seeking expansion in foreign areas in order to maintain its momentum. Abercrombie has also ventured into new markets, as evidenced by their recent NFL relationship and wedding collection. Additionally, it is concentrating on growing its Hollister chain, which appeals to Gen Z consumers, and making sure the brand stands apart from Abercrombie, which appeals to millennials.
Hollister saw a 14% increase in sales during the quarter, which accounted for over half of total revenue.
As retailers gear up for Black Friday and the duration of the holiday shopping season, it appears as if some of the dim sentiment clouding the back half of the year has evaporated after President-electDonald Trumps victory.
Abercrombie and Dick’s Sporting Goods, for instance, both released their profits on Tuesday. During the summer, they expressed caution, but now that the election is done, they are positive.
Consumer sentiment has improved since Trump s election and analysts are hopeful that certainty in the election results regardless of who won will be a boon for spending.
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