Abercrombie & Fitch is not giving up its crown anytime quickly.
The attire firm issued robust vacation steerage on Tuesday after posting its sixth straight quarter of double-digit gross sales development and one other quarter of outcomes that topped expectations. The current arrest of the corporate’s former CEO, Mike Jeffries, on fees of intercourse trafficking didn’t seem to have an effect on outcomes.
Here is how Abercrombie did in its fiscal third quarter in contrast with what Wall Road was anticipating, primarily based on a survey of analysts by LSEG:
- Earnings per share: $2.50 vs. $2.39 anticipated
- Income: $1.21 billion vs. $1.19 billion anticipated
The corporate’s reported web earnings for the three-month interval that ended Nov. 2 was $131.98 million, or $2.50 per share, in contrast with $96.2 million, or $1.83 per share, a yr earlier.
Gross sales rose to $1.21 billion, up round 14% from $1.06 billion a yr earlier.
For the all-important vacation procuring quarter, Abercrombie is anticipating gross sales development of 5% to 7%, forward of the 4.8% development that analysts had anticipated, in response to LSEG. For the total yr, the corporate is anticipating gross sales to rise between 14% and 15%, larger than the 12% to 13% vary it beforehand anticipated. That new outlook is larger than the 12.1% development analysts had anticipated, in response to LSEG.
Regardless of the better-than-expected steerage, Abercrombie shares dropped about 4% in intraday buying and selling. Given the corporate’s robust efficiency over the past couple of years, it is gotten more durable and more durable to impress Wall Road, and its quarterly income solely simply beat expectations. Additional, whereas its vacation gross sales steerage was larger than anticipated, it could signify a big deceleration from the 21% development it noticed within the year-ago interval.
Nonetheless, in a information launch, CEO Fran Horowitz struck a optimistic observe, leaving out the issues she’d talked about within the earlier quarter concerning the “more and more unsure surroundings.”
“With broad-based development throughout areas and types, we proceed to execute at a excessive degree, leveraging our regional playbooks and working mannequin. Every of our areas grew double-digits within the quarter, with the Americas rising 14%, EMEA rising 15% and APAC rising 32%,” stated Horowitz.
The Abercrombie and Hollister manufacturers posted comparable gross sales development of 11% and 21%, respectively. Horowitz famous the robust performances lapped development of 26% for Abercrombie and seven% for Hollister final yr.
Through the quarter, the corporate drove robust full worth gross sales, however these margin features have been largely offset by “larger freight prices” as a result of elevated charges and air utilization, stated chief working officer and outgoing finance chief Scott Lipesky. Through the quarter, the corporate relied extra closely on dear air freight to get product into shops “to mitigate potential delivery delays from longer and extra inconsistent ocean transit instances and the East Coast port strike,” stated Lipesky.
Beneath Horowitz’s path, Abercrombie has develop into one of many retail business’s greatest winners. Because it laps the robust efficiency it posted final yr, it is persevering with to construct on these numbers and stated Tuesday it is already seen a powerful begin to the vacation procuring season.
To maintain gaining momentum, Horowitz is trying to worldwide markets for development. Abercrombie has additionally gone into new classes, comparable to its marriage ceremony assortment and up to date partnership with the NFL. It is also targeted on growing its Hollister chain, which caters to Gen Z customers, and guaranteeing the model is differentiated from Abercrombie, which caters to millennials.
Through the quarter, gross sales at Hollister have been up 14%, accounting for almost half of all income.
As retailers gear up for Black Friday and the length of the vacation procuring season, it seems as if a number of the dim sentiment clouding the again half of the yr has evaporated after President-elect Donald Trump‘s victory.
For instance, Abercrombie and Dick’s Sporting Items – which each reported earnings on Tuesday – struck cautious tones when reporting earnings over the summer time, however that sentiment was changed with bullishness now that the election is over.
Client sentiment has improved since Trump’s election and analysts are hopeful that certainty within the election outcomes – no matter who received – might be a boon for spending.
Many retailers have been involved concerning the impression that Trump’s proposed tariffs plan could have on costs and margins, however the firm stated Tuesday solely between 5% and 6% of imports are coming from China. Its publicity to Mexico and Canada, which might face 25% tariffs as soon as Trump takes workplace, is “immaterial,” the corporate stated.
