Abercrombie explosion Actions Fired 115% with 90s Fashion: Shares in Abercrombie & Fitch soared after the retailer beat sales estimates for the first quarter, consolidating the youth fashion brand's recovery. Last Wednesday (29), the shares rose 24.32%, the biggest gain since August 2023, on a day marked by a fall in the main New York indices.
Already trading at an all-time high, Abercrombie's shares have more than doubled this year, rising 115%. Revenue increased for the sixth consecutive quarter, reaching US$ 1 billion, with profits on the rise due to reduced promotions and liquidation agreements.
Sales at Abercrombie's namesake brand stores rose 29% in the period, compared to an estimate of 17% from two analysts consulted by Bloomberg. Sales of the Hollister brand, also part of the group, rose 13% in comparable stores, beating the forecast of 8%.
Abercrombie is now forecasting an increase of about 10% in annual net sales, up from the previous estimate of 4% to 6%, as disclosed by the New Albany, Ohio-based company. The company continues to cater to the rapidly changing tastes of generation Z and millennials by offering an expanded range of products, from wedding attire to office wear.
Women's dresses and new trends in jeans, including wide legs and low-waisted jeans, were highlights that boosted sales, as CEO Fran Horowitz said in a results conference call. At Hollister, the brand aimed at teenagers, the men's division also returned to growth.
Meanwhile, competitors are struggling: VF, owner of Vans, Kipling and Timberland, last week reported its seventh consecutive quarter of falling sales, with losses across all its main brands. Dylan Carden, an analyst at William Blair, warns about the sustainability of Abercrombie's growth, rating the stock a hold recommendation.
"We believe the biggest risk is simply visibility into how long the company can sustain its current momentum," Carden said in a note.
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