Abercrombie & Fitch Co. (ANF) has reported a robust 21% increase in revenue for its fiscal second quarter, continuing a trend of impressive growth. The company's net income surged to $133 million, or $2.50 per share, up significantly from $57 million, or $1.10 per share, in the same period last year. The results were driven by strong sales performance, with comparable sales rising 18%-a notable increase that exceeded analysts' expectations of 15%.
Despite these impressive figures, Abercrombie's stock took a hit in early trading, falling 5.2% as investors reacted to the company's results. The drop comes after a substantial 89% surge in the company's shares this year, reflecting high expectations that were perhaps not fully met. The stock's performance in 2024 has made it the top performer among 15 companies in the S&P Composite 1500 Apparel Retail Index.
CEO Fran Horowitz, who has often highlighted the company's resilience in various economic conditions, acknowledged the ongoing uncertainties in the market. "We delivered a strong first half of the year, and we are increasing our full-year outlook," Horowitz said in a statement. "Although we continue to operate in an increasingly uncertain environment, we remain steadfast in executing our global playbook and maintaining discipline over inventory and expenses."
For the full year, Abercrombie raised its sales forecast from a 10% increase to a 12% to 13% growth range, aligning with analysts' expectations. However, the company noted that its fiscal 2024 will include one fewer week compared to fiscal 2023, which is expected to impact sales by approximately $50 million or 1.2 percentage points. The loss of this selling week is anticipated to affect the holiday quarter by $80 million or 5.5 percentage points.
Abercrombie's revenue for the quarter reached $1.13 billion, surpassing the $1.10 billion forecasted by analysts. This performance follows a 16% revenue growth in the same quarter of the previous year. The company's robust results were largely driven by stronger-than-expected summer and back-to-school sales.
The company's international expansion has also contributed to its growth. Sales at Abercrombie's Hollister brand increased by 17% during the quarter, while comparable sales rose 15%. The Europe, Middle East, and Africa (EMEA) division saw a 16% increase in sales. Abercrombie has strategically focused on its international markets and its Hollister and Abercrombie Kids brands as key growth drivers.
Previously, costly international expansion efforts had strained Abercrombie's performance, but the company is now taking a more measured approach. This month, Abercrombie announced a partnership with Haddad Brands to expand its Abercrombie Kids line and enhance its distribution channels globally. The collaboration aims to engage new customers and diversify Abercrombie's channel mix.
"Our partnership with Haddad Brands will help us build on our success and create growth opportunities for Abercrombie Kids by reaching new customers globally," Horowitz said. The expanded product line, which will include infant and toddler categories, is expected to be available in Haddad Brands' showrooms worldwide starting next month.
