Abercrombie & Fitch (ANF) earnings Q2 2024

Abercrombie & FitchSales rose 21% within the second fiscal quarter because the apparel company continued its rapid growth.

The increase in sales, which follows 16% growth within the year-ago period, prompted the corporate to issue an optimistic forecast for the present quarter. Still, the full-year outlook was broadly in keeping with estimates as the corporate prepares to have one fewer week this 12 months than last 12 months.

CEO Fran Horowitz – who often says that good corporations achieve any economic environment – could also be bracing for a turbulent second half of the 12 months, as she referenced the uncertain economy for the primary time in 4 quarters in the corporate’s earnings release.

“We delivered a strong first half and are raising our full-year guidance. While we continue to operate in an increasingly uncertain environment, we remain steadfast in executing our global strategic plan and maintaining disciplined inventory and spending levels,” Horowitz said. “We are on track and confident that we can deliver sustainable, profitable growth this year while making strategic long-term investments in marketing, digital and technology, and stores to enable future growth.”

The company’s shares, which had risen nearly 89 percent this 12 months by Tuesday’s close, fell about 15 percent in early trading.

Here’s how Abercrombie performed in comparison with Wall Street expectations, based on an analyst survey by LSEG (formerly referred to as Refinitiv):

• Earnings per share: USD 2.50 versus expected USD 2.22
• Revenue: $1.13 billion in comparison with expected $1.10 billion

The company reported net income for the three-month period ended August 3 was $133 million, or $2.50 per share, in comparison with $57 million, or $1.10 per share, a 12 months earlier.

Sales rose to $1.13 billion, a rise of around 21% over the previous 12 months’s $935 million.

During the quarter, store sales increased 18%, driven by better-than-expected summer and back-to-school sales.

For the present quarter, Abercrombie expects sales to extend by a low double-digit percentage, exceeding the 8.9 percent growth expected by LSEG analysts.

Abercrombie raised its full-year sales forecast from 10% growth to 12-13%, roughly in keeping with the 12% increase LSEG analysts had expected.

Fiscal 2024 could have one fewer week than fiscal 2023, which is able to likely weigh on full-year guidance. Abercrombie expects the lack of one week of sales to affect the vacation quarter by $80 million, or 5.5 percentage points. For the complete 12 months, the corporate expects sales to say no by $50 million, or 1.2 percentage points.

Last 12 months, Abercrombie became referred to as the largest comeback in retail, and investors were watching closely to see if the corporate could sustain its growth.

Horowitz sees international markets and the corporate’s brands Hollister and Abercrombie Kids as growth vectors which are already resulting in increasing sales.

During the quarter, Hollister’s sales increased 17 percent, while comparable sales rose 15 percent. In the corporate’s Europe, Middle East and Africa division, sales increased 16 percent.

Costly international expansion has been one in every of the missteps that has hurt Abercrombie’s performance prior to now, but this time the corporate is taking a distinct approach.

Earlier this month, the corporate announced a partnership with Haddad Brands – a kid’s clothing licensor – to create latest distribution channels for Abercrombie Kids and expand the product line into the infant and toddler category.

“As we work to diversify A&F Co.’s channel mix and drive sustainable, profitable growth, we are excited to partner with Haddad Brands to build on our success and create an opportunity to further grow the brand by reaching new customers globally in the years to come,” Horowitz said in an announcement on the time.

Abercrombie Kids products might be available in Haddad Brands showrooms worldwide next month.