Abercrombie & Fitch Co. lifts guidance on strong holiday sales

Abercrombie & Fitch continued the momentum it has displayed throughout the past year during the holiday season. 

The apparel retailer raised its net sales and operating margin outlook for its fourth quarter and full year, citing better-than-expected holiday sales. Abercrombie said it now expects sales for the quarter to rise in the “high-teens” percentage range from the year-ago quarter, compared with previous guidance of “low double-digits” growth. For the full year, it expects sales growth of 14% to 15%, up from its previous guidance of 12% to 14%. 

Abercrombie raised its operating margin guidance for the fourth quarter to around 15%, up from its previous outlook of 12% to 14%. It increased the full-year outlook to around 11% from 10%.

“Consistent with the first three quarters of 2023, our customers responded positively to compelling product assortments and engaging marketing leading us to increase our fourth quarter and full year net sales and operating margin outlook,” said CEO Fran Horowitz.  “We believe our increased full year fiscal 2023 expectations will put us ahead of schedule on our Always Forward Plan 2025 financial targets."

The plan anticipates annual revenues of $4.1 billion to $4.3 billion and a sustainable annual operating margin rate at or above 8%. 

"Importantly, we expect to exit fiscal 2023 poised for sustainable, profitable sales growth fueled by several years of transformational investments in our brands, people and operating model," added Horowitz.

The retailer said sales growth was led by its namesake brand, with Abercrombie’s women's business expected to achieve its highest-ever fourth quarter sales complemented by an acceleration in men's growth. Hollister brands, which include Gilly Hicks, are expected to deliver year-over-year fourth quarter sales growth led by the women's business.

“Continuing a trend of profitable growth, we expect Hollister brands will also achieve significant fourth quarter gross profit rate expansion, enabled by improved product and inventory management,” Horowitz said.

 In November, Abercrombie  reported better-than-expected top- and bottom-line results amid a strong back-to-school season and growth across its main brands. On the earnings call, Horowitz described the start of the company’s holiday shopping season as “encouraging.”

Abercrombie & Fitch Co. operates approximately 760 across its namesake and Hollister brands acorss North America, Europe, Asia and the Middle East.