Abercrombie & Fitch Co. (ANF) delivered a strong performance in the second quarter, exceeding analyst expectations on both the top and bottom lines. Sales surged 21% year-over-year to $1.134 billion, surpassing the consensus estimate of $1.101 billion. Comparable sales also jumped 18% year-over-year. Adjusted earnings per share (EPS) came in at $2.50, exceeding the analyst consensus of $2.22.
Fran Horowitz, Chief Executive Officer of Abercrombie & Fitch, highlighted the company’s commitment to its global strategy and disciplined approach to inventory and expenses. Despite operating in an increasingly uncertain environment, the company remains confident in its ability to navigate the challenges and deliver strong results.
Looking ahead, Abercrombie expects third-quarter net sales to grow in the low double digits year-over-year. The company projects an operating margin of 13% to 14%, compared to 13.1% in the same period last year.
Based on its strong Q2 performance and positive outlook, Abercrombie & Fitch revised its full-year 2024 guidance upwards. The company now expects net sales growth to be in the range of 12% to 13%, compared to the previous guidance of around 10%. Additionally, the operating margin forecast has been raised to 14% to 15%, from the prior estimate of around 14%. Capital expenditure is expected to remain at approximately $170 million.
Despite the positive results and revised outlook, Abercrombie & Fitch shares closed down 17% on Wednesday, likely due to investor concerns about the uncertain economic environment.
Following the earnings announcement, analysts adjusted their price targets on Abercrombie. UBS analyst Mauricio Serna maintained a Neutral rating on the stock but lowered the price target from $193 to $165. Morgan Stanley analyst Alexandra Steiger also maintained an Equal-Weight rating but reduced the price target from $155 to $147.
Overall, Abercrombie & Fitch delivered a strong performance in the second quarter and demonstrated its ability to execute its strategy in a challenging environment. The company’s positive outlook and revised guidance suggest continued growth potential, but the uncertain economic landscape may continue to weigh on investor sentiment.
