An Abercrombie & Fitch store stands in midtown Manhattan in New York City on Oct. 24, 2024.
Spencer Platt | Getty Images
Shares of Abercrombie & Fitch soared 16% in premarket trading on Tuesday after the company posted 7% growth in quarterly sales and issued its holiday guidance.
Abercrombie, which runs its namesake brand and Hollister, is expecting fourth-quarter sales to climb between 4% and 6%, which is largely below Wall Street expectations of 5.6% growth, according to LSEG. It anticipates earnings per share will be between $3.40 and $3.70, roughly in line with expectations of $3.55 per share.
Abercrombie beat Wall Street’s expectations on the top and bottom lines in the fiscal third quarter. Here’s how the apparel retailer did in the period ended Nov. 1 compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
- Earnings per share: $2.36 vs. $2.16 expected
- Revenue: $1.29 billion vs. $1.28 billion expected
The company’s reported net income for the quarter was $113 million, or $2.36 per share, compared with $131.98 million, or $2.50 per share, a year earlier.
Sales rose to $1.29 billion, up about 7% from $1.21 billion a year earlier.
During the quarter, sales at Abercrombie brand fell 2% to $617.35 million, well below the $631.8 million analysts were expecting, according to StreetAccount. Comparable sales fell by a staggering 7%.
For at least the third quarter in a row, Hollister saved the retailer, as sales climbed 16% to $673.27 million, well above the $649.7 million analysts had expected, according to StreetAccount. Comparable sales rose 15%.
The company’s namesake banner has fueled its comeback in recent years, but now that the Abercrombie brand’s growth has started to moderate, Hollister has picked up the baton. CEO Fran Horowitz said sales at Abercrombie are expected to be flat in the current quarter, indicating growth at Hollister is set to drive the company’s holiday shopping season.
Last quarter, Horowitz said the slowdown at Abercrombie was related to old inventory the company needed to mark down to sell. She said she expected the brand to be back to growth by the end of the year, but that no longer seems to be the case.
During the company’s conference call, investors will be looking out for details about the company’s plan to reignite growth at its namesake brand.
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