Abercrombie & Fitch on fire as Q2 sales soar 21%
Abercrombie & Fitch Co. delivered another strong quarter with broad-based growth across all its brands, regions and channels.
The company, which continues to outperform most other specialty apparel retailers, also raised its forecast for 2024 for the second time this year. Earlier this month, Abercrombie entered into a partnership with Haddad Brands to grow the distribution of its Abercrombie kids brand. The partnership marks the first time that Abercrombie kids items will be sold at non-Abercrombie stores.
Abercrombie’s net income rose to $133.2 million, or $2.50 a share, for the quarter ended Aug. 3, from $56.9 million, or $1.10 a share, in the year-ago quarter. Analysts has expected earnings of $2.22 a share. Operating income rose to $176 million as compared to operating income last year of $90 million.
Net sales surged 21% to $1.134 billion, just ahead of estimates of $1.101 billion. Sales at Abercrombie (includes Abercrombie & Fitch and Abercrombie Kids) jumped 26%, while sales at Hollister (includes Hollister and Gilly Hicks) rose 17% amid better-than-expected summer and back-to-school selling.
Sales in the company’s Europe, Middle East and Africa division rose 16%. The Americas region had net sales growth of 23%. Comparable sales increased 18%.
“Our team continued to execute at a very high level in the second quarter, resulting in better than expected sales growth and profitability,” said CEO Fran Horowitz. “Consistent with the first quarter, we delivered improved profitability driven by gross profit rate expansion and operating leverage, with a second quarter operating margin of 15.5% and record second quarter operating income of $176 million.”
On the heels of delivering a strong first half of the year, Horowitz said Abercrombie was raising its full-year outlook.
“Although we continue to operate in an increasingly uncertain environment, we remain steadfast in executing our global playbook and maintaining discipline over inventory and expenses,” she said. “We are on track and confident in our goal to deliver sustainable, profitable growth this year, while making strategic long-term investments across marketing, digital and technology and stores to enable future growth.”
The retailer lifted its outlook to net sales growth of 12% to 13%, above its previous outlook of 10%. It raised its operating margin outlook in the range of 14% to 15%, from its prior outlook of around 14%
