Abercrombie & Fitch (ANF) Q2 2024 Earnings

abercrombie and fitchThe apparel company’s revenue grew 21% during the second fiscal quarter as the clothing company builds on its rapid growth.

The sales gains, which come after a 16% growth in the same period last year, led the company to issue higher guidance for the current quarter. However, its full-year outlook was largely in line with estimates, as it prepares for a weaker week this year than last.

CEO Fran Horowitz — who often says that good companies win in any economic environment — may be bracing for a turbulent second half of the year because for the first time in four quarters, she referred to the uncertain state of the economy in the company’s earnings call.

“We had a strong first half and are raising our full-year outlook. While we continue to operate in an increasingly uncertain environment, we remain steadfast in executing our global playbook and maintaining discipline around inventory and expenses,” said Horowitz. “We are on track and confident in our goal of delivering sustainable, profitable growth this year, while making strategic, long-term investments across marketing, digital, technology and stores to enable future growth.”

Shares of the company — which have risen about 89% this year — fell about 9% in premarket trading.

Here’s how Abercrombie’s performance compared to what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

• Earnings per share: $2.50 vs $2.50 expected $2.22
• profit: $1.13 billion vs. $1.13 billion expected $1.10 billion

The company reported net income for the three months ended August 2018. The stock price in No. 3 was $133 million, or $2.50 per share, compared with $57 million, or $1.10 per share, a year earlier.

Sales rose to $1.13 billion, up about 21% from $935 million a year earlier.

During the quarter, same-store sales jumped 18%, driven by better-than-expected sales during the summer and back-to-school season.

For the current quarter, Abercrombie expects sales to rise by a low double-digit percentage, better than the 8.9% growth that LSEG analysts had forecast.

Abercrombie raised its full-year sales guidance from 10% growth to 12% to 13%, roughly in line with the 12% rise LSEG analysts had expected.

The company’s fiscal 2024 will have one less week than fiscal 2023, which will likely impact its full-year guidance. Abercrombie expects the loss of one selling week to have an impact of $80 million on the holiday quarter, or 5.5 percentage points. For the full year, the company expects sales to be $50 million, or 1.2 percentage points.

Over the past year, Abercrombie has become known as retail’s biggest comeback story, and investors have been watching to see if the company can continue its growth.

Horowitz has looked to international markets and the company’s own brands Hollister and Abercrombie Kids as growth vectors, which are already boosting sales.

During the quarter, sales at Hollister jumped 17% while comparable sales rose 15%. In the company’s Europe, Middle East and Africa division, sales rose 16%.

Expensive international expansion has been a misstep that has hurt Abercrombie’s performance in the past, but the company is taking a different approach this time.

Earlier this month, it announced a partnership with Haddad Brands, a children’s apparel licensee, to create new distribution channels for Abercrombie Kids and grow the product line to include infants and toddlers.

“As we work to diversify A&F’s channel mix and drive sustainable, profitable growth, we are excited to partner with Haddad Brands to build on our success and create an opportunity to grow the brand in the coming years by engaging with new customers,” Horowitz said in a statement at the time.

Abercrombie Kids products are scheduled to be available in Haddad Brands showrooms globally next month.