Abercrombie sees customers in their teens, early 20s and 'well past their 40s'

By Tomi Kilgore

Stock soars toward a fourth straight record close after another earnings beat and raised sales-growth outlook

Shares of Abercrombie & Fitch Co. continued their record run on Wednesday after the apparel and accessories retailer reported another quarterly earnings beat and raised its sales growth outlook, amid continued strength in the Abercrombie brand.

Chief Executive Fran Horowitz said on the post-earnings call with analysts that fiscal first-quarter sales growth was broad based, across regions and brands.

"I'm also pleased to share that women's and men's divisions grew across our brand families in the quarter," Horowitz said, according to an AlphaSense transcript. "We entered the year in a clean inventory position and maintained that discipline through Q1, allowing for fewer promotions, which contributed to gross profit rate improvement."

The stock (ANF) ran up 19.3% in midday trading, to put it on track for a fourth straight record close.

Net income for the quarter to May 4 rose to $113.9 million, or $2.14 a share, from $16.6 million, or 32 cents a share, in the same period a year ago.

Excluding nonrecurring items, adjusted earnings per share rose to $2.14 from 39 cents, and were well above the FactSet consensus of $1.76, to mark the fifth straight quarter of bottom-line beats.

Net sales grew 22.1% to $1.02 billion, a record for a first quarter and above the FactSet consensus of $967.4 million, as Abercrombie sales climbed 31.1% to $571.5 million and Hollister sales increased 12.3% to $449.2 million.

Comparable sales, or sales of stores open at least one year, jumped 21%, with Abercrombie's sales rising 29% and Hollister's sales up 13%.

Helping boost Abercrombie sales was the launch of the Wedding Shop, which was an extension of the brands' "best dressed guest" collection. For Hollister, the men's division got a boost from strength in fleece tops and bottoms, while growth in the women's division was balanced across categories.

CEO Horowitz explained that the addressable market for Abercrombie is "a bit larger" than that of Hollister, which caters to a "teen-specific" consumer. For Abercrombie, customers are "coming into the brand in the early 20s, and staying well past their 40s," Horowitz said.

For fiscal 2024, the company raised its guidance range for net sales growth to "around 10%" from $4% to 6%, with Abercrombie brands expected to keep outperforming Hollister brands.

The stock has now more than doubled year to date - up 106.1% - while the SPDR S&P Retail ETF XRT has gained 3.8% and the S&P 500 has advanced 10.5%.

-Tomi Kilgore

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05-29-24 1218ET

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