ORLANDO, FL — lululemon and Abercrombie & Fitch It raised its fourth-quarter forecast on Monday after seeing a strong response from consumers during the important holiday season.
Lululemon’s new outlook was welcomed by investors, sending its shares up about 3% in premarket trading. But Abercrombie’s shares fell about 8% as investors wondered whether Abercrombie’s rapid growth was coming to an end.
Lululemon now expects sales to grow 11% to 12% to $3.56 billion to $3.58 billion, up from the previous range of $3.48 billion to $3.51 billion.
Excluding the company’s additional fiscal week in the fourth quarter of 2024, Lululemon expects sales to grow 6% to 7%.
The company also raised its profit forecast. Lululemon now forecasts fourth-quarter earnings per share of $5.81 to $5.85, compared with the previous forecast of $5.56 to $5.64. The company expects gross profit margin to grow by 0.3 percentage points, after previously forecasting a decline of 0.2 to 0.3 percentage points.
“Our guests responded well to our product offerings during the holidays, allowing us to increase our fourth-quarter guidance,” Treasurer Megan Frank said in a statement.
Abercrombie, meanwhile, also expects its holiday quarter results to be slightly better than expected. The apparel company raised its net sales growth forecast to 7% to 8%, compared with previous guidance of 5% to 7%.
Abercrombie currently expects full-year sales to grow 15%. The company had expected sales to grow 14% to 15% during the period.
The outlook is a far cry from the staggering numbers Abercrombie posted last year, when holiday sales surged 21% compared with the same period last year.
Investors who are bullish on Abercrombie would say it makes sense to see the company’s growth start to slow as it matures and compares to the same period last year, but after about two years of explosive stock growth, some might will turn bearish.
Still, Abercrombie’s full-year sales guidance remains close to last year’s expectations, when revenue grew 16%.
Abercrombie CEO Fran Horowitz said in a press release that going forward, the company will focus more on improving profits rather than sales as it looks to “drive long-term shareholder value.”
“With two years of double-digit revenue and profit expected, I am as confident as ever in the power of our brand and operating model, supported by the exceptional capabilities we have built,” Horowitz said. “We will continue to achieve sustainable profitable growth through 2025 by executing our strategy to win and retain customers around the world. We aim to leverage our healthy profit structure and assets balance sheet, boosting operating income and earnings per share faster than sales.
The retailers issued their guidance ahead of the annual ICR meeting in Orlando, where some of the nation’s best-known retailers are expected to report holiday results ahead of schedule and meet with investors and analysts to discuss their results. The conference, which brings together Wall Street’s largest banks, law firms, private equity firms and investors, is known to set the tone for consumer trading and retail business results at the start of the year.
macy’s department storeCompanies expected to attend the conference also released early results but did not share the good news like some rivals. The department store now expects sales to be at or slightly below its previous range of $7.8 billion to $8 billion. Shares fell more than 3% in pre-market trading.
Urban Outfitters also released holiday results ahead of schedule and said net sales in the two months ended Dec. 31 were up 10% compared with the same period last year. Comparable retail segment sales grew 6%, driven by strong online sales.
Comparable sales at Urban’s namesake brand fell 4% as the chain continued to lag behind Anthropologie and Free People, which saw comparable sales rise 10% and 9%, respectively.
Meanwhile, sales at Urban’s rental service Nuuly surged 55%, driven by a 53% increase in average active users.
Shares were slightly higher in premarket trading.
Overall, the holiday shopping season is not expected to see the usual sales blowout in the wake of the Covid-19 pandemic. The National Retail Federation said sales are expected to be 2.5% and 3.5%. When inflation is taken into account, real growth is expected to be minimal.
Still, some early data suggests the holiday season may be better than expected.
U.S. holiday quarter retail sales, excluding auto sales, Annual increase of 3.8% The campaign ran between Nov. 1 and Dec. 24, according to Mastercard’s SpendingPulse, which measures in-store and online sales across various payment types.
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