Abercrombie & Fitch has exceeded expectations with first-quarter net sales of $1.1 billion, up 8 per cent from the same quarter last year.
“One of the reasons this quarter was a good one comes down to solid execution and continuing to get the retail basics right,” said GlobalData MD Neil Saunders.
“There was a lot of newness in stores this quarter, including, towards the latter end of the period, a compelling capsule collection arranged around the A&F Vacation Shop theme.
“This encouraged customers to think about summer wardrobes and drove the purchasing of multiple pieces to create outfits,” said Saunders.
The company’s net sales grew 7 per cent in the Americas, with a 5 per cent increase in the Apac region, and a 12 per cent increase in Europe, the Middle East and Africa.
Hollister’s net sales grew by 22 per cent, as the Abercrombie brand saw a 4 per cent decrease compared to the same period last year.
“While this interrupts a trend of growth, it was delivered against the backdrop of 31.1 per cent growth in the prior year, so it is not a huge concern,” said Saunders of the Abercrombie brand’s sales dip.
Abercrombie & Fitch’s operating income was $102 million, down from $130 million, with its operating margin down from 12.7 per cent to 9.3 per cent.
Moving forward, Abercrombie & Fitch estimates that its net sales will grow between 3 per cent and 6 per cent, with an expected increase in its operating margin of between 12.5 per cent and 13.5 per cent.
“Operating margin guidance has slipped a little, but given the tariff environment, this is to be expected; it may slip further if more onerous tariffs are applied, but this will be a problem for the entire market rather than just Abercrombie & Fitch,” said Saunders.
