Abercrombie & Fitch posts record quarter as profit soars, sales top $1B
Abercrombie & Fitch Co. maintained momentum in its first quarter with results that smashed expectations as the apparel retailer continues to outperform others in its sector.
Net income rose to $113.9 million, or $2.14 a share, for the quarter ended May 4, up from $16.6 million, or $0.32 a share, in the year-ago period. Analysts had expected earnings per share of $1.74.
In the earnings statement, CEO Fran Horowitz noted that strong top-line growth, along with gross profit rate expansion, led to record first quarter operating income and an operating margin of 12.7%.
Net sales rose for the six straight quarter, increasing 22.1% to $1.02 billion, topping estimates of $967.4 million. By banner, Abercrombie sales jumped 31.1% to $571.5 million; Hollister sales rose 12.3% to $449.2 million.
Total comparable sales rose 21%. Abercrombie’s comp sales were up 29%, while Hollister’s sales increased 13%.
“Our outstanding first quarter results reflect the power of our brands and strong execution of our global playbook,” stated Horowitz. “We successfully navigated seasonal transitions with relevant assortments and compelling marketing, leveraging agile chase capabilities and inventory discipline, driving sales above our expectations.”
Abercrombie & Fitch has undergone a total reinvention under Horowitz, who was appointed CEO in 2017 following the ouster of the controversial Mike Jeffries. The namesake brand, which courted teens with its dark interiors, loud music, model-like employees and what many deemed an exclusionary attitude, has been transformed into a contemporary, inclusive brand for young millennials, with sleek interiors that match its product offerings.
In March, the company unveiled “The A&F Wedding Shop,” a collection of apparel for wedding-related activities for brides, attendees and guests.
Citing its “excellent first quarter performance,” Abercrombie increased its full year sales and operating margin outlook for fiscal 2024. It now expects net sales to be up “around” 10% from $4.3 billion in fiscal 2023, compared to its previous outlook of growth in the range of 4% to 6%. Operating margin is now expected to be “around” 14%, compared to the previous outlook of around 12%.
For the current quarter, Abercrombie expects sales will increase by a mid-teens percentage, ahead of estimates of up 9%
“We remain on track to achieve our 2024 goal of demonstrating sustainable, profitable growth after a defining year for the company in fiscal 2023,” Horowitz said. “Our brands are delivering high-quality, on-trend assortments for new and retained customers across regions and brands. Importantly, we continue to make strategic investments across stores, digital and technology to further strengthen the company in pursuit of our long-term ambition.”
Abercrombie & Fitch Co. operates approximately 750 stores across North America, Europe, Asia and the Middle East.