Hollister breaks years of declining sales: new growth engine for Abercrombie & Fitch

Hollister, the younger sister of Abercrombie & Fitch, has turned to be the growth engine for the teen apparel group, driving sales upwards and therefore breaking a three-year consecutive declining in-store sales.

Hollister has stolen the limelight from formerly youngsters’ favourite Abercrombie & Fitch. Over the fourth quarter, the group witnessed a boost in same-store sales during the 2015 holiday shopping season.

At Hollister, same-store sales were up 4 percent in the fourth quarter, turning the latter into the second consecutive quarter of growth.

“The upcoming year will continue to be one of reinvention. We believe that the current management team is strong and has the right mix of skills to make the necessary changes and reinvigorate the brand. However, they are up against a low growth, challenging environment which means that the play for the fiscal as a whole is as much about holding onto current market share as it is about positioning the business for future growth,” summed up Neil Saunders, CEO of Conlumino.

Abercrombie & Fitch focusing on product-revamp and customer experience

Market insiders highlight that this upward trend illustrates the retailer's focus on product revamp and improving the in-store customer experience is paying off.

Investors are happier that they have been in years, according to a Reuters report. On the wake of the news, the stock gained 10 percent.

In fact, although humble in another context, the 1 percent boost achieved over the last quarter of the company’s fiscal year has come in as a surprise to the industry, as experts and analysts were expecting a dip of 0.10 percent, according to Reuters.

Net income rose 30.1 percent to reach 57.7 million dollars in the fourth quarter while net sales fell 0.6 percent, down to 1.11 billion dollars.

"They (results) are a sign that the brand continues to make progress in what remains a challenging market during a particularly difficult period of trading," Neil Saunders, chief executive of research firm Conlumino, told Reuters.

Soon after the fashion retailer released its quarterly figures, Topeka Capital analyst Dorothy Lakner reiterated a ‘hold’ rating on Abercrombie Fitch (NYSE: ANF) and set a price target of 26 dollars

 

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