Dive Brief:
- Abercrombie & Fitch Co.’s third-quarter net sales were $1.2 billion, up 14% from a year ago, the company said in a Tuesday press release. Comparable sales rose 16%, while net income for the quarter was $133.9 million, up 37% from $97.7 million the prior year.
- By brand, Abercrombie’s net sales rose 15% from a year ago to $629.8 million, with comps rising 11%. The company’s Hollister brands saw comps rise 21% and a 14% year-over-year rise in net sales to $579.1 million. By the end of the year, the company plans to open 60 new stores (about 40 Abercrombie and 20 Hollister), close 40 locations, and complete 60 remodels and rightsizes.
- The company on Tuesday also announced the promotion of Robert Ball, the company’s senior vice president of corporate finance, investor relations and treasury, to chief financial officer. Ball took over CFO duties on Nov. 20 from Chief Operating Officer Scott Lipesky, who had held the CFO role from 2017 to 2023 before taking on his current role. Ball will continue to report to Lipesky.
Dive Insight:
Over the last year, Abercrombie & Fitch Co. has consistently delivered strong financial performance. In May, the company reported net sales of $1 billion, which was the highest first-quarter net sales in its history. The company sustained that momentum in Q2, reporting net sales of $1.1 billion and comp growth of 18%.
It’s noteworthy that Abercrombie sustained its sales and earnings momentum despite a backdrop of weather-related disruptions in the form of hurricanes and flooding during Q3, William Blair analysts led by Dylan Carden said in a Tuesday note.
“Earnings were again a bright spot, though we are seeing some signs of fatigue here,” Carden said. “Total gross margin of 65.1% was up 20 basis points from last year and 60 basis points better than expectations.”
However, after seeing larger gross margin gains through the first half of the year, Carden noted Abercrombie’s expectation of more tempered growth during the remainder of the year.
CEO Fran Horowitz said Q3’s top- and bottom-line results beat the company’s expectations. Additionally, the company saw broad-based sales growth across regions, brands and genders driven by strong traffic. Abercrombie reduced promotions compared to last year, driving growth in unit selling and average unit retail during the quarter.
“We continue to see balanced growth across categories, giving our customers a steady flow of newness and choice,” Horowitz said, according to an earnings call transcript. “This healthy top-line performance, enabled by our closeness to the customer, also drove a gross profit rate of 65.1%, the best third-quarter gross profit rate since 2010.”
The company raised its full-year outlook as a result of the strong quarter, now expecting net sales to grow between 14% and 15%, compared to 12% to 13% previously.
Ball, the incoming CFO, joined the company in 2003. He has held several finance leadership positions during his tenure, including chief financial officer of the Abercrombie & Fitch and Abercrombie Kids brands.
Horowitz said Ball has worked closely with her and the executive leadership team to advance the company’s transformation and turnarounds. “With his decades of experience at the company, Robert is uniquely qualified to have an immediate impact as he continues to help drive our strategies forward,” Horowitz said in a statement.
