An Abercrombie & Fitch store in New York, US, on Monday, Aug. 19, 2024. Abercrombie & Fitch Co. is scheduled to release earnings figures on August 28. Photographer: Yuki Iwamura/Bloomberg via Getty Images
Yuki Iwamura | Bloomberg | Getty Images
Abercrombie & Fitch sales growth slowed again in its fiscal second quarter as the apparel company struggles to top the surge it enjoyed last fiscal year.
During the quarter, sales at the namesake Abercrombie brand fell 5% while comparable sales dropped 11%.
But the success of teen-focused Hollister brand helped to salvage the quarter. Overall, Abercrombie & Fitch sales climbed 7%, led by 19% growth at Hollister – the brand’s best-ever second-quarter net sales growth, the company said.
Abercrombie narrowly beat Wall Street expectations on the top and bottom lines. The company also hiked its full-year outlook. Abercrombie now expects sales to climb 5% to 7%, compared with previous guidance of 3% to 6% growth.
It also raised the low end of its earnings outlook, and now anticipates earnings of $10 to $10.50 per share. Abercrombie previously anticipated earnings of $9.50 to $10.50 per share.
Shares fell slightly in premarket trading.
Here’s how the company did in its second fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
- Earnings per share: $2.32 adjusted vs. $2.30 expected
- Revenue: $1.21 billion vs. $1.20 billion expected
The company’s reported net income for the three-month period that ended August 2 was $141 million, or $2.91 per share, compared with $133 million, or $2.50 a share, a year earlier. Excluding the impact of a favorable litigation settlement, Abercrombie saw earnings of $2.32 per share.
Sales rose to $1.21 billion, up about 7% from $1.13 billion a year earlier.
Abercrombie & Fitch, once a forgotten mall brand, has been on a rocket ship of growth over the last few years. But the surge has started to slow at its namesake banner.
The company has turned to new categories, such as dresses, athleisure and bridal, to stimulate growth. It’s also working to expand internationally and lean on partnerships.
On Monday, the company announced it would be the NFL’s first “official fashion partner” – a multiyear deal that will include personal styling for athletes, athlete-led campaigns and player-designed apparel. The partnership comes after Abercrombie launched an assortment of NFL licensed products in 2022, a category that has performed well for the company.
It has teamed up with star players like Christian McCaffrey, Tee Higgins and CeeDee Lamb to advertise the partnership and designed limited-edition co-designed apparel that will be available for sale during the upcoming season.
The partnership reflects the steps retailers are taking to ensure they can continue to grow sales and stay relevant with consumers at a time when shoppers are pulling back on nice-to-have items like new clothes and accessories. Competitors like Levi, American Eagle and Gap have teamed up with celebrities in recent marketing campaigns ahead of the back to school and fall shopping seasons.
