Abercrombie & Fitch, the apparel company, reported a 21% increase in revenue during its fiscal second quarter, continuing its strong growth trend. This growth follows a 16% increase in the same period last year and has prompted the company to issue bullish guidance for the current quarter. However, Abercrombie’s full-year outlook remains largely in line with estimates due to the fact that this year has one fewer week than the previous year.
CEO Fran Horowitz, who believes that good companies can succeed in any economic environment, acknowledged the uncertain state of the economy for the first time in four quarters. Despite this uncertainty, Horowitz expressed confidence in the company’s ability to deliver sustainable and profitable growth by executing its global playbook and maintaining discipline in inventory and expenses. Abercrombie aims to make strategic long-term investments in marketing, digital technology, and stores to drive future growth.
While Abercrombie’s shares have seen an impressive 89% increase this year, they dropped about 9% in premarket trading following the earnings release. The company’s earnings per share of $2.50 exceeded the expected $2.22, and its revenue of $1.13 billion also surpassed the expected $1.10 billion.
During the quarter, Abercrombie’s net income was $133 million, compared to $57 million in the previous year. Sales rose to $1.13 billion, driven by a strong performance in same-store sales, which increased by 18%. The company expects sales to continue growing in the current quarter, with a low double-digit percentage increase. Its full-year sales guidance has been raised from 10% to a 12% to 13% increase.
Abercrombie’s international markets and its Hollister and Abercrombie Kids brands have been key growth drivers. Sales at Hollister increased by 17%, and comparable sales rose by 15%. In the Europe, Middle East, and Africa division, sales climbed by 16%. The company is looking to expand its distribution channels for Abercrombie Kids through a partnership with Haddad Brands, a licensor of children’s wear. This partnership aims to engage with new customers and grow the brand globally.
Abercrombie’s recent success marks a significant turnaround for the company, which faced challenges in the past due to costly international expansion. However, the company’s current approach to international markets and brand expansion seems to be paying off. With its strong financial performance and strategic initiatives, Abercrombie is positioned for continued growth and success in the retail industry.
