Abercrombie & Fitch (ANF) Earnings Q2 2024

Abercrombie & FitchThe apparel company's revenue rose 21% during the fiscal second quarter, as the apparel company continues its rapid growth.

This surge in sales, which follows a 16% increase in the same period last year, prompted the company to issue bullish guidance 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 year.

CEO Fran Horowitz — who often says good companies win in any economic environment — is perhaps bracing for turmoil in the second half of the year, as for the first time in four quarters he's mentioned the uncertain state of the economy when releasing the company's earnings.

“We delivered a strong first half of the year and we are raising our full-year outlook. Although we continue to operate in an uncertain environment, we remain steadfast in executing our global strategy and maintaining discipline on inventory and expenses,” Horowitz said. “We remain on track to deliver sustainable, profitable growth this year and are making strategic long-term investments in marketing, digital and technology, and stores to enable future growth.”

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

Here's how Abercrombie performed compared to Wall Street expectations, based on a survey of analysts by LSEG (formerly known as Refinitiv):

• earnings per share: $2.50 vs. $2.22 expected
• Income: $1.13 billion vs. $1.10 billion expected

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 nearly 21% from $935 million a year earlier.

During the quarter, same-store sales increased 18%, led 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, which is better than the 8.9% increase expected by LSEG analysts.

Abercrombie raised its full-year sales guidance from 10% growth to 12% to 13%, broadly in line with the 12% increase expected by LSEG analysts.

The company's fiscal 2024 will have one fewer week than fiscal 2023, potentially impacting its full-year guidance. Abercrombie expects the loss of one sales week to impact its holiday quarter by $80 million, or 5.5 percentage points. For the full year, the company expects its sales to hit $50 million, or 1.2 percentage points.

Last year, Abercrombie was recognized as one of the biggest comeback companies in retail, and investors were watching to see if the company could keep up its growth.

Horowitz sees international markets and the company's Hollister and Abercrombie Kids brands, which are already boosting sales, as vehicles for growth.

During the quarter, Hollister sales grew 17% while comparable sales rose 15%. Sales in the company's Europe, Middle East and Africa division grew 16%.

Costly international expansion was one of the mistakes that hurt Abercrombie's performance in the past, but this time the company is taking a different approach.

Earlier this month, it announced a partnership with children's clothing licensee Haddad Brands to create new distribution channels for Abercrombie Kids and expand the product line into the infant and toddler categories.

“As we work to diversify The A&F Company’s channel mix and pursue 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 connecting with new customers globally,” Horowitz said in a statement at the time.

Abercrombie Kids products will be available in Hadad Brands showrooms globally next month.