Abercrombie & Fitch raises outlook on strong Q2

Abercrombie & Fitch Co. reported second quarter net sales of 935 million dollars, up 16 percent as compared to last year on a reported and a constant currency basis and comparable sales increase of 13 percent.

Gross profit rate of 62.5 percent, was up approximately 460 basis points as compared to last year and operating income turned positive to 90 million dollars on a reported basis.

The company’s net income per diluted share reached 1.10 dollars on a reported basis as compared to net loss per diluted share last year of 33 cents and 30 cents on a reported and adjusted non-GAAP basis, respectively.

Commenting on the financial results, Fran Horowitz, the company’s chief executive officer, said: “Our net sales and operating margin exceeded our expectations as global growth accelerated throughout the second quarter. We continue to see strong customer receptivity of our brands and product, led by 26 percent net sales growth in Abercrombie brands. To date, our efforts to evolve Hollister brands’ positioning and assortment are paying off, achieving a return to net sales growth at positive 8 percent for the quarter.”

For fiscal 2023, the company now expects net sales growth of around 10 percent from 3.7 billion dollars in 2022 versus the previous outlook of up 2 percent to 4 percent and operating margin to be in the range of 8 percent to 9 percent, an improvement from the previous outlook of 5 percent to 6 percent.

For the third quarter, the company expects net sales growth to be up low double-digits and operating margin to be in the range of 8 percent to 10 percent compared to an adjusted operating margin of 2.4 percent in Q3 2022.