The shares of Abercrombie & Fitch have shot up on the stock market this Wednesday after the fashion firm has announced by surprise a record of sales in its main chain and that the group has achieved profits in the first quarter of its fiscal year, February to april. The company has also raised its forecasts for the year as a whole. The shares have risen more than 28% two hours after the opening of the New York Stock Exchange.
“Fiscal year 2023 has started strongly, with net sales and an operating margin in the first quarter above our expectations,” said Fran Horowitz, CEO of the company, through a statement.
Net sales were 834 million dollars (777 million euros at current exchange rates), 3% more than in the same period last year, but sales of the Abercrombie brand soared 14%, up to 436 million. With this, the chain that gives its name to the group is once again the main one, as it surpasses Hollister, aimed at a younger audience and whose turnover fell 7%, to 400 million dollars. The United States and Asia have acted as engines of growth in sales, which have fallen in Europe.
Gross margin has risen to 61.0%, some 570 basis points (5.7 percentage points) more than the previous year. The year-on-year improvement was mainly due to 760 basis points lower freight costs and 230 basis points year-on-year growth in average unit prices, partially offset by 320 basis points higher cotton and raw materials costs. premiums and 100 basis points for the adverse impact of currencies.
Consolidated attributable net profit was $16.5 million, compared to losses of $16.5 million in the same period last year, when inflation and rising costs took their toll on the group. Analysts expected it to reduce the red numbers, but not to make a profit.
“Abercrombie’s offering is resonating significantly with our target customer, setting several other sales records this quarter across genres, categories and geographies. Work continues on the Hollister brands,” Horowitz said, announcing an increase in forecasts for the year as a whole: “Looking ahead, we remain cautiously optimistic about consumer demand and our ability to react to a dynamic macroeconomic environment, also supported by our solid balance sheet”, he added.
For fiscal 2023, the New Albany, Ohio-based company now expects growth of 2% to 4%, instead of the previous 1% to 3% range. Abercrombie will continue to outperform Hollister and the domestic market will continue to be stronger than the foreign. Additionally, fiscal year 2023 includes a 53rd week for fiscal year purposes, which the company expects will translate to an extra $45 million in total net sales in the fourth quarter and full year 2023.
The operating margin range also improved by one point, which went from 5% to 6% for the year as a whole. The company expects an improvement in freight and raw material costs, partially offset by the combination of inflation and increased investment in other operating expenses.
The results suggest that despite economic uncertainty, some shoppers are still willing to spend on clothing. Shares of Urban Outfitters have also soared (rising more than 20%, then losing some ground), after the company’s results, presented on Tuesday afternoon, beat expectations. Billing increased 5.9% to a record of 1,114 million dollars. The benefit shot up 67.5%, up to 52.8 million, according to the company.
Kohl’s Corp. also presented better-than-expected first-quarter results on Wednesday, sending its shares up as much as 14% in pre-market trading, though they later deflated. In his case, the benefit remained at 14 million dollars despite the fact that sales fell by 3.3%, to 3,355 million, as reported by the company in a statement.
Follow all the information on Economy and Business on Facebook and Twitteror in our weekly newsletter
Five Days agenda
The most important economic appointments of the day, with the keys and the context to understand their scope.
RECEIPT IN TU CORREO
