Abercrombie & Fitch reported net sales of US$935 million for the second quarter ended July 29, an increase of 16 per cent year over year.
Total sales were driven by a 26 per cent growth of the Abercrombie brand and an 8 per cent increase in its Hollister brand.
By region, sales grew 19 per cent, 4 per cent, and 18 per cent in Americas, EMEA, and Apac, respectively.
The company’s operating expenses were up 6 per cent, driven by increases in incentive compensation, store occupancy and technology costs while operating income reached $90 million compared to an operating loss of $2 million last year.
Net income per diluted share was $1.10 compared to net loss per diluted share of $0.33 last year.
“Our net sales and operating margin exceeded our expectations as global growth accelerated throughout the second quarter,” said Fran Horowitz, CEO at Abercrombie & Fitch.
The company increased its full-year outlook, with net sales expected to increase 10 per cent from $3.7 billion in 2022 and operating margin in the range of 8-9 per cent.
“Stellar performance”
“The very strong results from Abercrombie & Fitch almost suggest that the company is living in a different era to the rest of the retail sector,” commented Neil Saunders, MD of GlobalData.
Given a weaker prior year when sales dropped 6.9 per cent, the company has made up for that with a “stellar performance” this year, Saunders continued.
“The company is also up on the pre-pandemic period of 2019, with sales running 11.2 per cent above where they were back in the second quarter of that year.”
Product remains the hero, he stated, adding there are three things that help merchandise at Abercrombie work.
“The first is the company’s ability to quickly interpret fashion trends and get them onto the shop floor. The second is the close focus on quality – with things like soft fabrics and attention to detail helping to justify price points and providing a point of differentiation from other retailers. The third is the careful segmentation of the range which is enabling Abercrombie to address all the wardrobe occasions of its customers from casual to athleisure to dressier to travel.
“We remain optimistic about Abercrombie & Fitch, even as the market tightens,” Saunders concluded.
