Abercrombie & Fitch Q4 sales surge 21%; issues upbeat guidance
Abercrombie & Fitch maintained its momentum during the crucial holiday quarter, fueled by sales growth across all its regions and brands.
The apparel lifestyle retailer, which has undergone a dramatic turnaround under the leadership of Fran Horowitz, reported better-than-expected fourth-quarter results as higher selling prices and lower freight and raw material costs boosted profitability. The quarter was also marked by the continued resurgence of the Abercrombie brand.
“Following several years of transformation across our brands, people and operating model, fiscal 2023 was a defining year for our company,” stated CEO Horowitz. “In the first full year of our Always Forward Plan, we executed our playbook, delivering the right product, voice and experience across regions and brands to our global customers.”
Net income rose to $158.4 million, or $2.97 a share, for the quarter ended Feb. 3, from $38.3 million, or $0.75 per share, in the year-ago period. Analysts had expected earnings per share of $2.83.
Sales jumped 21.1% to $1.45 billion, above estimates of $1.43 billion. Abercrombie sales rose 34.8% to $755.2 million. Hollister sales increased 9.1% to $697.7 million. Same-store sales rose 16%.
Gross margin was 62.9%, 7.2 percentage points higher than the year ago period.
“Our strong fourth quarter was fueled by sales growth across regions and brands,” Horowitz said. “Abercrombie brands grew net sales 35%, continuing an impressive multi-quarter growth trend, while Hollister brands grew 9%, delivering a third consecutive quarter of sales growth. By staying close to our customers, tightly controlling inventories and continuing to operate with financial discipline, our team delivered year-over-year fourth quarter operating margin expansion of 800 basis points, reaching 15.3%.”
For the full year, sales rose 16% to $4.3 billion.
Looking ahead, Abercrombie expects expects first-quarter sales to rise by a low double-digit percentage, compared to estimates of up 7.2%. For the full year, it anticipates sales will grow between 4% and 6%, compared to estimates of 4%. The company said it expects Abercrombie brands will continue to outperform Hollister brands and the Americas will continue to lead the regional performance.
“We entered fiscal 2024 in a position of strength with momentum across our brand portfolio,” Horowitz said. “The success of our playbook gives us confidence that we can now shift more of our focus to expanding our global customer base. This year, our goal is to deliver sustainable, profitable growth while making the necessary investments to build and support our longer-term ambition of $5 billion in global sales.”
As of Feb. 3, the retailer operated a total of 765 stores, including 518 under the Hollister banner and 247 under the Abercrombie banner.