Following a Solid First Quarter of Sales and Profit Gains, the Company Increases its 2024 Projections
Abercrombie & Fitch Co. posted another solid quarter with sales and profit gains, particularly in the Americas and its Abercrombie brand, exceeding Wall Street’s estimates.
The first quarter ending May 4 had its net income rise to $115 million, or $2.14 a diluted share, up from $17.8 million, or $0.32 a share, during the same period the previous year.
Operating income was up to $130 million, compared to just $34 million last year. Net sales saw a rise of 22 percent to reach $1 billion, a significant increase from the previous year’s $836 million. Comparable sales also increased by 21 percent.
A noteworthy increase was seen in the gross profit rate, rising about 540 basis points to 66.4 percent in comparison to last year.
A&F revised its 2024 forecast upwards. Net sales are now predicted to rise around 10 percent from $4.3 billion in fiscal 2023, up from the previous prediction of a 4 to 6 percent increase. A consistent trend is expected with Abercrombie brands outperforming Hollister brands and the Americas leading regional performance.
Looking at the second quarter of this year, net sales are expected to increase in the mid-teens compared to the fiscal second quarter 2023 level of $935 million. Operating margin is projected to be in the range of 13 to 14 percent, pitted against an operating margin of 9.6 percent in Q2 2023.
“Our outstanding first quarter results reflect the power of our brands and strong execution of our global playbook,” stated Fran Horowitz, A&F’s CEO. “Growth was broad-based across regions and brands with Abercrombie brands registering 31 percent growth and Hollister brands delivering growth of 12 percent. Strong top-line growth, along with gross profit rate expansion, led to record first quarter operating income and an operating margin of 12.7 percent.”
Horowitz further added, “With excellent first quarter performance, we are increasing our full year sales and operating margin outlook. We remain on track to achieve our 2024 goal of demonstrating sustainable, profitable growth… We continue to make strategic investments across stores, digital and technology to further strengthen the company in pursuit of our long-term ambition.”
In terms of divisions, Abercrombie sales, including Abercrombie and Abercrombie kids brands, surged 31 percent to $571.5 million from $436 million in the same quarter last year. Hollister sales, incorporating Hollister and Gilly Hicks brands, rose 12 percent to $499.2 million from $399.9 million in the same timeframe last year.
