Key Highlights
- Shares climbed 11% in premarket hours following second-quarter earnings of $4.17 per share, substantially exceeding Wall Street’s $1.99 projection
- Revenue increased 5% to reach $1.27 billion, surpassing analyst forecasts of $1.25 billion
- Comparable store sales remained unchanged from last year, falling just short of the anticipated 0.8% growth
- Annual earnings guidance elevated to $13.10-$13.60 per share, significantly above the previous estimate of $10.20-$11.00
- Full-year revenue growth projection narrowed to 5%, improving from the earlier 3%-5% range
Shares of Abercrombie & Fitch climbed 11% to $121.36 during Wednesday’s premarket session following the fashion retailer’s impressive fiscal second-quarter results and upwardly revised annual projections.
The retailer disclosed adjusted earnings of $4.17 per share for the period concluding August 2. This figure represented a substantial increase from last year’s $2.32 and significantly surpassed the Wall Street consensus forecast of $1.99 per share, based on FactSet data.
However, it’s important to highlight that the quarterly earnings included a $1.75 per share boost from tariff reimbursements, which contributed to the impressive bottom-line outperformance.
Quarterly revenue reached $1.27 billion, representing a 5% year-over-year improvement and marginally exceeding analyst projections of $1.25 billion.
Performance Across Brands and Markets
Company executives highlighted that growth was well-distributed across both brands and geographic markets. The Americas region demonstrated strengthening momentum, while performance across Europe, the Middle East, and Africa showed signs of improvement.
Revenue for the Abercrombie brand increased 8% during the quarter. The Hollister brand posted 2% sales growth, although comparable store sales for Hollister declined 3%.
Overall comparable sales remained flat year-over-year, representing a modest improvement from the 1% decrease recorded in the first fiscal quarter. Analysts had projected a 0.8% gain.
The Abercrombie brand experienced a 4% increase in same-store sales, fueled by ongoing success in capturing millennial customer interest.
Meanwhile, Hollister maintained its appeal among Gen Z shoppers, with management noting that back-to-school shopping momentum would provide support during the latter half of the year.
Forward-Looking Projections
Looking ahead to the fiscal third quarter, management anticipates net income ranging from $2.90 to $3.20 per share, alongside revenue growth of 5% to 6%. Wall Street analysts had expected $2.82 per share.
Annual net income guidance received a significant upgrade to $13.10 to $13.60 per share. The company’s previous outlook called for $10.20 to $11.00 per share. The analyst consensus had been $10.72 per share.
The company now projects full-year revenue growth of approximately 5%, compared to its earlier guidance of 3% to 5%.
Shares had faced selling pressure leading up to the earnings announcement. ANF closed Tuesday’s session down 3%, amid broader weakness in the retail sector.
Through Tuesday’s close, ANF remained down 13% for the year, though the stock had gained 9.4% during August alone.
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