Abercrombie & Fitch (ANF) Third Quarter 2023 Results

Abercrombie & Fitch.

Courtesy: Abercrombie & Fitch

Abercrombie & Fitch beat past estimates on Tuesday, 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, however, fell more than 5% in premarket 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 holiday quarter, Abercrombie expects double-digit net sales growth from a year earlier, 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.

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.

“Our strong third quarter results, with net sales and operating margin significantly exceeding our expectations, demonstrate the strength of our global strategy across our entire portfolio of brands,” said CEO Fran Horowitz in a press release. “As we approach the important holiday season, our results for fiscal 2023 give us confidence that we can continue to meet our customers’ expectations and generate profitable growth. operating margin.”

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 earnings release here.