Abercrombie & Fitch (ANF) Posts Strong Q1, Raises 2024 Sales Outlook
Abercrombie & Fitch Co. , demonstrating particular strength in the Americas and with its Abercrombie brand, on Wednesday posted another solid quarter marked by sales and profit gains that exceeded Wall Street expectations.
Net income for the first quarter ended May 4 rose to $115 million, or $2.14 a diluted share, from $17.8 million, or $0.32 a share, in the year-ago period.
Operating income rose to $130 million as compared to operating income last year of $34 million.
Net sales rose 22 percent to $1 billion, up from $836 million a year ago. Comparable sales rose 21 percent.
Gross profit rate of 66.4 percent rose about 540 basis points as compared to last year.
A&F raised its guidance for 2024. Net sales are now seen up around 10 percent from $4.3 billion in fiscal 2023, compared to the previous outlook of sales rising in the range of 4 to 6 percent. The Abercrombie brands will continue to outperform Hollister brands, and the Americas will continue to lead the regional performance, the company indicated.
For the second quarter of this year, net sales are seen increasing in the mid-teens compared to the fiscal second quarter 2023 level of $935 million. Operating margin is expected in the range of 13 to 14 percent compared to an operating margin of 9.6 percent in Q2 2023.
“Our outstanding first quarter results reflect the power of our brands and strong execution of our global playbook,” Fran Horowitz, A&F’s chief executive officer, said in a statement Wednesday. “We successfully navigated seasonal transitions with relevant assortments and compelling marketing, leveraging agile chase capabilities and inventory discipline, driving sales above our expectations. Growth was broad-based across regions and brands with Abercrombie brands registering 31 percent growth and Hollister brands delivering growth of 12 percent. Strong top-line growth, along with gross profit rate expansion, led to record first quarter operating income and an operating margin of 12.7 percent.
“With excellent first quarter performance,” Horowitz added, “we are increasing our full year sales and operating margin outlook. We remain on track to achieve our 2024 goal of demonstrating sustainable, profitable growth after a defining year for the company in fiscal 2023. Our brands are delivering high-quality, on-trend assortments for new and retained customers across regions and brands. Importantly, we continue to make strategic investments across stores, digital and technology to further strengthen the company in pursuit of our long-term ambition.”
By division, Abercrombie sales, including the Abercrombie and abercrombie kids brands, rose 31 percent to $571.5 million from $436 million in the year-ago quarter. Hollister sales, including the Hollister and Gilly Hicks brands, rose 12 percent to $499.2 million from $399.9 million in the year-ago period.
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