Prime Highlight
- Abercrombie & Fitch stock jumped 37% after the company reported stronger-than-expected third-quarter earnings driven by Hollister’s standout performance.
- Hollister’s momentum helped offset declining sales in the flagship Abercrombie brand, reassuring investors about the company’s growth prospects.
Key Facts
- Q3 revenue rose 7% to $1.29 billion, and EPS reached $2.36, beating analyst expectations, though net income fell to $113 million from $131.98 million.
- Hollister sales surged 16% to $673 million, with comparable sales up 15%, while Abercrombie brand sales fell 2% to $617 million.
Background
Shares of Abercrombie & Fitch surged 37% on Tuesday after the retailer posted stronger-than-expected third-quarter results, driven largely by the strong performance of its Hollister brand. The company said Hollister’s solid momentum helped offset slowing sales at its flagship Abercrombie brand.
For the quarter ended November 1, companywide revenue rose 7% to $1.29 billion, slightly above analyst expectations. Earnings per share came in at $2.36, beating the forecast of $2.16, according to LSEG data. Net income, however, fell to $113 million, compared with $131.98 million a year earlier.
The Abercrombie brand, which propelled the retailer’s comeback in recent years, showed signs of cooling. Sales fell 2% to $617 million, and comparable sales dropped sharply by 7%, missing expectations. CEO Fran Horowitz said the brand is working through older inventory and aims to return to growth, supported by new collaborations with the NFL and luxury retailer Kemo Sabe.
In contrast, Hollister delivered another strong quarter. Sales climbed 16% to $673 million, easily beating expectations, while comparable sales rose 15%. Horowitz said Hollister’s fresh campaigns and product lineup will play a major role in the holiday season. The company plans to open 25 Hollister stores and refresh 35 by the end of the year.
Looking ahead, Abercrombie expects holiday-quarter sales to grow between 4% and 6%, slightly below Wall Street estimates. Full-year sales are now forecast to rise 6% to 7%, higher than previous expectations.
The strong quarter reassured investors that the retailer can maintain growth even as its namesake brand slows, pushing its stock sharply higher.
