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Abercrombie & Fitch reported its strongest first quarter in its history on Wednesday, continuing a winning streak that again exceeded expectations.
The retailer’s sales jumped 22% compared to last year, while profits were nearly seven times higher and came in well ahead of Wall Street’s estimates.
Shares were up about flat in premarket trading.
Here’s how the apparel company did in its first fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
- Earnings per share: $2.14 vs. $1.74 expected
- Revenue: $1.02 billion vs. $963.3 million expected
The company’s reported net income for the three-month period that ended May 4 was $113.9 million, or $2.14 per share, compared with $16.6 million, or 32 cents a share, a year earlier.
Sales rose to $1.02 billion, up about 22% from $836 million a year earlier.
“We successfully navigated seasonal transitions with relevant assortments and compelling marketing, leveraging agile chase capabilities and inventory discipline, driving sales above our expectations,” CEO Fran Horowitz said in a news release. “Growth was broad-based across regions and brands with Abercrombie brands registering 31% growth and Hollister brands delivering growth of 12%.”
Abercrombie has been one of the biggest winners in retail. As it stares down a tough year of comparisons, the company is building on the double-digit sales growth it saw in 2023.
The retailer’s comparable sales grew 21%, on top of the 3% growth it saw in the year-ago period. Abercrombie is expecting sales to increase again in the current fiscal year, and increased its revenue guidance.
For the full year, the retailer now expects sales to grow about 10%, compared to a previous outlook of between 4% and 6%. Analysts had expected growth of about 7%, according to LSEG.
For the current quarter, Abercrombie anticipates sales will increase by a mid-teens percentage, ahead of estimates of up 9%, according to LSEG.
Horowitz plans to build on the company’s success by developing its Hollister brand, which accounts for about half of the company’s overall sales, and bringing more categories to its namesake banner. In March the retailer debuted the “A&F Wedding Shop” – a collection of apparel for brides and attendees that can be used not only for the day of but also for other wedding parties, like bachelorette festivities and rehearsals.
Pieces in the collection, which include a range of dresses, bikinis, pajamas, skirts and other items, range between $80 and $150. The mid-tier price point for a day that’s typically very costly for many couples gives Abercrombie an in with the value-seeking consumer and a foothold in the overall bridal wear market, which is expected to reach $83.5 billion in the U.S. by 2030, according to ResearchAndMarkets.com.
Over the last six years, Abercrombie has been working to transform itself from an exclusionary retailer that used loud branding and shirtless models to drive sales into a company that’s focused on inclusivity and geared towards working millennials.
The company’s transformation is years in the making, but began to bear fruit in 2023 when the retailer posted a 16% annual sales gain at the same time the U.S. apparel market shrunk. Its stock surged 285% in 2023 and is up another 73% so far this year as of Tuesday’s close, outpacing the S&P 500’s gains of 11%.
Read the full earnings release here.