Abercrombie tops Street fueled by Hollister; closing 60 stores in 2018
There were signs in the fourth quarter that Abercrombie & Fitch Co.’s turnaround is taking hold as the chain’s namesake brand ended its five-year same-store sales losing streak.
The retailer on Wednesday posted fourth quarter results that topped analysts’ forecasts amid another strong performance by its Hollister division and a sales rebound at Abercrombie. The company also reported that, in 2018, it will close up to 60 stores through lease expirations and open 21 full-price stores, with 11 in the U.S. and 10 in international markets.
Net income for the quarter was $74.2 million, or $1.05 per share, for the quarter ended Feb. 3, up from $48.8 million, or 71 cents per share, in the year-ago period. Adjusted EPS was $1.38, easily topping the $1.10 FactSet consensus.
Sales totaled $1.19 billion, up from $1.04 billion last year and topping the $1.16 billion analysts had expected. (The additional week in fiscal 2017 benefited fourth quarter net sales by approximately 4%.) Direct-to-consumer net sales grew to approximately 34% of total company net sales, compared to approximately 31% last year.
Same-store sales increased 9%, also better than expected, rising 11% at Hollister and 5% at the namesake brand. The increase at Abercrombie comes on the heels of five years of declines and follows an update of its merchandise and an ongoing revamp of its stores.
“We are pleased by our performance, delivering positive comparable sales for the fourth quarter across brands, channels and geographies and more than doubling our operating income,” said CEO Fran Horowitz. “Our focus on staying close to our customer, executing to our playbook and maintaining our disciplined approach to expense management delivered a strong performance on both the top and bottom line.”
Horowitz called 2017 a year of “significant progress” for the company.
“We achieved several important milestones, including Hollister growing to $2 billion in sales, Abercrombie returning to positive comparable sales for the fourth quarter and record digital sales across all brands,” she said. “We continue to improve the customer experience with ongoing investments in loyalty programs, stores, direct-to-consumer and omnichannel capabilities.”
For the full year, net sales were up 5% to $3.493 billion, and same-store sales rose 3%. The additional week in fiscal 2017 and changes in foreign currency exchange rates each benefited full year net sales by approximately 1%.
By brand, net sales increased 11% to $2.039 billion for Hollister and decreased 2% to $1.454 billion for Abercrombie from last year. Direct-to-consumer net sales grew to approximately 28% of total company net sales, compared to approximately 26% last year.
Abercrombie & Fitch forecasts fiscal 2018 same-store sales and sales growth in the low-single digits. The FactSet consensus is for same-store sales growth of 1.8% and sales of $4.46 billion, up from $3.49 billion this year.
The company is targeting capital expenditures to be approximately $130 million for fiscal 201, including approximately $85 million for store updates and new stores and approximately $45 million for direct-to-consumer and omnichannel investments, information technology and other projects.
The retailer on Wednesday posted fourth quarter results that topped analysts’ forecasts amid another strong performance by its Hollister division and a sales rebound at Abercrombie. The company also reported that, in 2018, it will close up to 60 stores through lease expirations and open 21 full-price stores, with 11 in the U.S. and 10 in international markets.
Net income for the quarter was $74.2 million, or $1.05 per share, for the quarter ended Feb. 3, up from $48.8 million, or 71 cents per share, in the year-ago period. Adjusted EPS was $1.38, easily topping the $1.10 FactSet consensus.
Sales totaled $1.19 billion, up from $1.04 billion last year and topping the $1.16 billion analysts had expected. (The additional week in fiscal 2017 benefited fourth quarter net sales by approximately 4%.) Direct-to-consumer net sales grew to approximately 34% of total company net sales, compared to approximately 31% last year.
Same-store sales increased 9%, also better than expected, rising 11% at Hollister and 5% at the namesake brand. The increase at Abercrombie comes on the heels of five years of declines and follows an update of its merchandise and an ongoing revamp of its stores.
“We are pleased by our performance, delivering positive comparable sales for the fourth quarter across brands, channels and geographies and more than doubling our operating income,” said CEO Fran Horowitz. “Our focus on staying close to our customer, executing to our playbook and maintaining our disciplined approach to expense management delivered a strong performance on both the top and bottom line.”
Horowitz called 2017 a year of “significant progress” for the company.
“We achieved several important milestones, including Hollister growing to $2 billion in sales, Abercrombie returning to positive comparable sales for the fourth quarter and record digital sales across all brands,” she said. “We continue to improve the customer experience with ongoing investments in loyalty programs, stores, direct-to-consumer and omnichannel capabilities.”
For the full year, net sales were up 5% to $3.493 billion, and same-store sales rose 3%. The additional week in fiscal 2017 and changes in foreign currency exchange rates each benefited full year net sales by approximately 1%.
By brand, net sales increased 11% to $2.039 billion for Hollister and decreased 2% to $1.454 billion for Abercrombie from last year. Direct-to-consumer net sales grew to approximately 28% of total company net sales, compared to approximately 26% last year.
Abercrombie & Fitch forecasts fiscal 2018 same-store sales and sales growth in the low-single digits. The FactSet consensus is for same-store sales growth of 1.8% and sales of $4.46 billion, up from $3.49 billion this year.
The company is targeting capital expenditures to be approximately $130 million for fiscal 201, including approximately $85 million for store updates and new stores and approximately $45 million for direct-to-consumer and omnichannel investments, information technology and other projects.