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Abercrombie & Fitch rallies over 20% after fiscal-Q1 earnings

18:20 29 May 2024

Abercrombie & Fitch (ANF.US) is one of the best performing US companies today. Stock rallies over 20% following release of fiscal-Q1 2025 earnings report (calendar February - April 2024) and trades at fresh all-time highs. Fiscal-Q1 2025 earnings turned out to be better-than-expected and upbeat guidance for fiscal-Q2 2025 and full-year fiscal-2025.

Abercrombie & Fitch results for fiscal-Q1 2025 turned out to be better than expected all across the board. Net sales grew over 22% and exceeded $1 billion, driven by strong over-30% growth in sales of Abercrombie brand. Meanwhile, cost of revenue climbed just 5.2%, paving the way for an over 500 basis point improvement in gross margin, compared to a year ago quarter. Operating and net margins also improved significantly, with net income jumping increasing over 470% year-over-year. 

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What drew even more attention than solid fiscal-Q1 earnings were new forecasts. Abercrombie expects net sales growth in 'mid-teens' in fiscal-Q2 as well as 10% growth in full fiscal-2025. Operating margin is seen at 13-14% in fiscal-Q2 and 'around 14%' in full-year. This means that the company not only expects strong sales growth to continue, but also expects further improvement in margins.

Fiscal-Q1 2025 earnings

  • Net sales: $1.02 billion vs $0.96 billion expected (+22.1% YoY)
    • Abercrombie: $571.5 million vs $526.5 million expected (+31.1% YoY)
    • Hollister: $449.2 million vs $433.1 million expected (+12.3% YoY)
  • Comparable sales: +21% vs +12.6% expected (+3% a year ago)
    • Abercrombie: +29% vs +17% expected (+14% a year ago)
    • Hollister: +13% vs +8.2% expected (-6% a year ago)
  • Cost of revenue: $343.3 million vs $343.6 million expected (+5.2% YoY)
  • Gross profit: $677.5 million vs $608.7 million expected (+32.9% YoY)
    • Gross margin: 66.4% vs 64.4% expected (61.0% a year ago)
  • Adjusted operating profit: $129.8 million vs $99.0 million expected (+237.8% YoY)
    • Adjusted operating margin: 12.7% vs 9.4% expected (4.6% a year ago)
  • Adjusted net income: $113.9 million vs $90.7 million (+474.4% YoY)
    • Adjusted net margin: 11.2% vs 8.4% expected (2.4% a year ago)
  • Adjusted diluted EPS: $2.14 vs $1.69 ($0.39 a year ago)

Fiscal-Q2 2025 forecast

  • Net sales growth: 'up mid-teens' vs +8.5% expected
  • Operating margin: 13-14%

Full-year fiscal-2025 forecast

  • Net sales growth: 10%, up from previous guidance of 4-6%
  • Operating margin: 'around 14%', up from previous guidance of 'around 12%'
  • Capital expenditures: unchanged at 'about $170 million'

Source: xStation5

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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