Abercrombie & Fitch Reports Its Best Ever Quarter That Officially Cement It As One Of The Biggest Retail Winners

On Wednesday, Abercombie & Fitch Co. (NYSE:ANF) continued to surpass expectations. For the fiscal first quarter, sales jumped 22% YoY with profits multiplying about seven times compared to last year’s comparable quarter. Upon the report, shares rose 25% on Wednesday but tumbled on Thursday. 

Fiscal First Quarter Highlights

For the quarter ended on May 4th, revenue rose 22% YoY to $1.02 billion, surpassing LSEG’s consensus estimate of $963.3 million. Net income skyrocketed to $113.9 million, which is about seven times more compared to last year’s comparable quarter. CEO Fran Horowitz noted that Abercrombie brands grew 31% while Hollister brands reported growth of 12%.

Outlook

With comparable sales growing 21%, on top of the 3% growth from last year’s comparable quarter, Abercombie expects sales to rise again in the current fiscal year, while also lifting its revenue guidance. For the full year, Abercombie expects sales growth of about 10%, lifting its prior outlook in the range from 4% to 6%, surpassing LSEG’s expectation of 7%. As for the current quarter, sales growth is expected in mid-teens percentage, also topping LSEG’s 9% estimate. 

Abercombie & Fitch is officially one of the biggest retail winners.

Growing across regions, Abercombie & Fitch successfully navigated seasonal transitions with relevant assortments, compelling marketing and inventory discipline, building upon the double-digit sales growth it achieved in 2023. The retailer plans to continue developing its Hollister brand that makes half of its sales, while also adding more categories to its namesake banner. Back in March, Abercombie successfully launched the A&F Wedding Shop for brides and wedding attendees. By bringing mid-tier price point wear offerings in a typically costly industry, no wonder that the wedding shop surpassed the retailer’s own expectations, while the wedding season hasn’t even started yet. 

Abercrombie’s transformation took about six years, but the results began showing in 2023 in the form of a 16% annual sales gain while the U.S. apparel market contracted. In 2023, Aberbombie’s stock surged 285%, going up73% this year up to Tuesday’s close. In addition, Horowitz believes there’s more runway ahead, with international markets providing another growth window. The latest reported quarter is another proof that its playbook is working, as Abercombie has successfully transformed itself from being from an exclusionary retailer that used loud branding and shirtless models into a brand that drives sales by focusing on inclusivity and working millennials.

Later on Wednesday, its rival American Eagle Outfitters (NYSE:AEO) maintained its guidance. For the quarter ended on May 4th, American Eagle Outfitters reported that revenue grew 6% to $1.1 billion. American Eagle Outfitters reported earnings of 34 cents a share. For the full year, American Eagle Outfitters expects revenue growth between 2% and 4%, while guiding for operating income between $445 million and $465 million. All in all, American Eagle Outfitters exhibited early signs that it’s on the right track with its strategic roadmap kicking in. Another rival, The Gap Inc (NYSE:GPS) will be announcing its results after the bell.

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