Abercrombie & Fitch jumps on surprise profit, sales forecast raise
Reuters
Published May 24, 2023 07:34AM ET
Updated May 24, 2023 11:56AM ET
By Granth Vanaik
(Reuters) - Abercrombie & Fitch Co on Wednesday posted a surprise quarterly profit and lifted its full-year sales forecast, as the clothing retailer banks on its efforts to fill shelves with in-demand goods, sending its shares up as much as 29%.
The apparel retailer has worked to increase its stock across all its labels and lure affluent Americans to purchase for a variety of items including dresses, cargos and formal pants as people return to social gatherings and office work.
Consumers have been diversifying somewhat out of denims, said CEO Fran Horowitz, adding "this non-denim bottom trend that we're seeing is really terrific."
The company's eponymous Abercrombie label posted a 14% increase in sales in the quarter, while the Hollister brand, dropped 7%.
"(Abercrombie) is no longer just a jeans and T-shirt business," Horowitz said on a post-earnings call.
The apparel maker's inventories fell 20% to $448 million, compared to a year ago.
"ANF's Q1 report suggests brands with good momentum have remained resilient despite macro pressures," UBS analysts said in a note.
Abercrombie's gross margins rose 570 basis points to 61%, benefiting from lower freight costs and its efforts to control promotions.
Abercrombie's forecast comes in contrast to several consumer companies such as Kohl's Corp (NYSE:KSS) and Target Corp (NYSE:TGT) that have maintained their guidance for this year.
"While it is true that pressures are building in the retail market, we are not anticipating this to create a complete collapse in consumer demand," said Neil Saunders, managing director of GlobalData, adding that the company is fortunately on the right side of trends.
The Ohio-based company now expects 2023 net sales to increase 2% to 4%, compared to its previous range of 1% to 3% growth.
On an adjusted basis, Abercrombie reported a profit of 39 cents per share, compared with estimates of a loss of 5 cents.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.