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US apparel retailer beats analysts’ estimates as sales at established stores rise 3% in the third quarter.
US apparel retailer beats analysts’ estimates as sales at established stores rise 3% in the third quarter.

Abercrombie & Fitch soars after upbeat holiday sales forecast


By Melissa Fares and Uday Sampath Kumar - Dec 3rd 2018, 13:52

US teen apparel retailer Abercrombie & Fitch forecast same-store sales for the holiday quarter above analysts’ estimates, driven by strong sales at its Hollister and flagship stores, sending its shares rising 24% in early trading. 

“We saw a solid start to the holiday season in November, with strong double-digit growth on Singles Day on Tmall, and a record performance over the peak holiday period from Thanksgiving Day through Cyber Monday,” CEO Fran Horowitz said on a call with investors.

Tmall is Alibaba’s giant online marketplace.

Horowitz emphasised the steep investments the company has made in better managing its supply chain and product assortment to serve customers faster.

Abercrombie has changed its namesake fashion brand in recent years, doing away with risque advertising and logo-emblazoned apparel, which fell out of fashion in the late 2000s. It has relied on Hollister to generate the majority of its revenue as its denim and Gilly Hicks intimates collections prove to be a hit with younger customers.

The New Albany, Ohio-based retailer now expects to close fewer stores in the current year based on improved performance and successful lease renegotiations. It expects closing up to 40 stores by the end of the year, primarily in the US, down from its previous target of closing up to 60 stores.

Ken Perkins, founder of research firm Retail Metrics, said the company was well-positioned for a strong holiday but Abercrombie’s namesake brand has some work to do to resonate with shoppers.

The company promoted the head of Hollister, Kristin Scott, to the newly created position of Global Brands president. Stacia Andersen, brand president of Abercrombie & Fitch, would be leaving the company, it said.

The apparel retailer said it expected fourth-quarter same-store sales to rise in the low single digits. Analysts had expected an increase of 0.6%.

Sales at established stores rose 3% in the third quarter ended November 3, well above an increase of 1.6% estimated by analysts, according to IBES data from Refinitiv.

Net income rose to $23.9m, or 35c per share, from $10.1m, or 15c per share, a year earlier.

Excluding one-time items, the company earned 33c per share, while net sales rose 0.2% to $861.2m.

Analysts, on average, expected adjusted earnings of 20c per share on revenue of $853m.
Business Live 

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