Abercrombie & Fitch The company reported its strongest first-quarter results in history on Wednesday, extending a streak of beating expectations again.
The retailer’s sales rose 22% over last year, while profits jumped nearly sevenfold, far exceeding Wall Street expectations.
Abercrombie’s shares soared more than 10% in early trading.
Here’s how the apparel company’s fiscal first-quarter performance compared with Wall Street expectations, according to a survey of analysts by LSEG:
- Earnings per share: $2.14 vs expected $1.74
- income: US$1.02 billion, expected US$963.3 million
The company reported net income of $113.9 million, or $2.14 a share, for the three months ended May 4, compared with $16.6 million, or 32 cents a share, a year earlier.
Sales increased to US$1.02 billion, an increase of approximately 22% from US$836 million in the same period last year.
“We successfully navigated seasonal shifts through relevant category and compelling marketing, leveraging agile tracking capabilities and inventory discipline, driving sales beyond our expectations,” CEO Fran Horowitz said in the release. Growth was broad across regions and brands, with Abercrombie up 31% and Hollister up 12%. “
Abercrombie is one of the biggest winners in retail. The company is building on double-digit sales growth in 2023 as it faces a tough year.
The retailer’s comparable sales increased 21%, building on a 3% increase in the year-earlier period. Abercrombie expects sales to rise again this fiscal year and raised revenue guidance.
The retailer now expects full-year sales to grow about 10%, compared with its previous forecast of 4% to 6%. Analysts had expected growth of about 7%, according to LSEG.
According to LSEG, Abercrombie expects sales to grow 15% this quarter, higher than the 9% expected.
Horowitz plans to build on the company’s success by developing the Hollister brand, which accounts for about half of the company’s total sales, and bring more categories to its namesake brand. In March, the retailer launched the “A&F Wedding Shop” – a line of clothing for brides and attendees that can be worn not only on their wedding day, but also for other wedding parties, such as bachelorette parties and rehearsals.
The collection includes a range of dresses, bikinis, pajamas, skirts and other pieces priced between $80 and $150. The mid-range price point of the day is often prohibitively expensive for many couples, allowing Abercrombie to appeal to value-seeking consumers and gain a foothold in the overall bridal wear market, which is expected to grow by 2030 in the U.S. will reach US$83.5 billion Research and Marketing Website.
Abercrombie has spent the past six years transforming itself from an exclusive retailer that used loud branding and shirtless models to drive sales to a company focused on inclusivity and geared toward millennials.
The company’s transformation has been years in the making but began to bear fruit in 2023, when the retailer reported a 16% increase in annual sales while the U.S. apparel market shrank. Its shares have soared 285% in 2023 and are up 73% year to date as of Tuesday’s close, outpacing the S&P 500’s 11% gain.
Read the full earnings report here.
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