Abercrombie & Fitch signals strong holidays with sales forecast raise

By Neil J Kanatt

(Reuters) -Abercrombie & Fitch lifted its annual sales forecast on Tuesday, betting on strong demand at its namesake label and its teen-focused Hollister brand during the crucial holiday shopping season.

The company has doubled down on refreshing its product lines across denims, dresses and seasonal offerings as consumers earmark their dollars for smaller luxuries such as jeans and in-vogue handbags.

The strategy has helped Abercrombie beat sales estimates for nine straight quarters, driving a 75% surge in the retailer's shares this year.

On the day, however, its stock lost 4% in early trading, tracking sector declines driven by bleak holiday forecasts from Kohl's (NYSE:KSS ) and Best Buy (NYSE:BBY ).

"(Abercrombie's) continued beat-and-raise trend is impressive given the choppy macro environment and discerning consumer," said analyst Dana Telsey of Telsey Advisory Group.

Retailers Walmart (NYSE:WMT ) and Target (NYSE:TGT ) have forecast a mixed holiday season ahead of this year's Black Friday and Christmas, as consumers hold back on big purchases and wait for the best prices and deals.

In contrast, Abercrombie raised its fiscal 2024 net sales growth forecast to between 14% and 15%, compared with 12% to 13% expected earlier. It also recorded a double-digit jump in sales across all regions in the third quarter.

"We have the right product in place to meet demand," CEO Fran Horowitz said on a post-earnings call.

Easing production expenses and full-price sales helped Abercrombie increase its gross profit margin by 20 basis points to 65.1%.

Net sales at the company rose 14% to $1.21 billion in the quarter, compared with analysts' estimates of $1.19 billion, according to data compiled by LSEG.



Excluding items, its profit of $2.50 per share beat estimates of $2.39.

Separately, Abercrombie named insider Robert Ball (NYSE:BALL ) as chief financial officer, succeeding Scott Lipesky, who was promoted to chief operating officer in 2023.

Source: Investing.com