Abercrombie & Fitch (ANF) Q2 2024 Results

Abercrombie and FitchRevenue grew 21% during its second fiscal quarter as the apparel company continues its breakneck growth.

The sales surge, which follows 16% growth in the same period a year earlier, prompted the company to issue a bullish outlook for the current quarter. Still, its full-year outlook was largely in line with estimates as it prepares for one fewer week this year than last.

Chief Executive Officer Fran Horowitz, who often says that good companies win in any economic environment, may be bracing for a turbulent second half of the year because for the first time in four quarters, she referenced the uncertain state of the economy in the company's earnings release.

“We had a strong first half and are raising our guidance for the full year. While we continue to operate in an increasingly uncertain environment, we remain steadfast in executing our global strategy and maintaining discipline around inventory and expenses,” Horowitz said. “We are on track and confident in our goal of achieving sustainable, profitable growth this year while making long-term strategic investments in marketing, digital and stores to enable future growth.”

The company's shares, which have risen nearly 89% this year, fell about 9% in premarket trading.

Here's how Abercrombie fared compared with what Wall Street expected, according to a survey of analysts by LSEG, formerly known as Refinitiv:

• Earnings per share: $2.50 vs. $2.22 expected
• Revenue: $1.13 billion versus $1.1 billion forecast

The company's reported net income for the three-month period ended Aug. 3 was $133 million, or $2.50 per share, compared with $57 million, or $1.10 per share, a year earlier.

Sales rose to $1.13 billion, up 21% from $935 million a year earlier.

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

For the current quarter, Abercrombie expects sales to rise by a low double-digit percentage, better than the 8.9% growth expected by LSEG analysts.

Abercrombie raised its full-year sales forecast from 10% growth to a rise of 12% to 13%, which is roughly in line with the 12% increase that LSEG analysts had expected.

The company’s fiscal 2024 will have one fewer week than fiscal 2023, which will likely impact its full-year outlook. Abercrombie expects the one-week loss of sales to impact its holiday quarter by $80 million, or 5.5 percentage points. For the full year, the company expects its sales to increase by $50 million, or 1.2 percentage points.

Over the past year, Abercrombie has become retail's biggest comeback story, and investors have been watching to see if the company can sustain its growth.

Horowitz has looked to international markets and the company's Hollister and Abercrombie Kids brands as growth vectors, which are already driving sales.

For the quarter, Hollister sales increased 17%, while comparable sales increased 15%. In the company's Europe, Middle East and Africa division, sales increased 16%.

Costly international expansion has been one of Abercrombie's past mistakes, but the company is taking a different approach this time.

Earlier this month, it announced a partnership with Haddad Brands, a children’s apparel licensor, to create new distribution channels for Abercrombie Kids and grow the product line to include categories for babies and toddlers.

“As we work to diversify A&F Co.'s channel mix and drive sustainable, profitable growth, we are thrilled to partner with Haddad Brands to build on our success and create an opportunity to grow the brand in the years ahead by engaging with new customers globally,” Horowitz said in a statement at the time.

Abercrombie Kids products will be available in Haddad Brands showrooms around the world next month.