Abercrombie & Fitch sees 16% pop in comparable sales for holiday quarter

Abercrombie & Fitch Co. (NYSE:ANF) gained slightly in early trading on Wednesday after topping estimates with its Q4 earnings report.

Total sales were up 21% for the crucial holiday quarter to $1.5B and were also up 21% on a constant currency basis. An additional week in FY23 benefited Q4 net sales by approximately $50M, or 430 basis points. Comparable sales were up 16% during the quarter, led by a 28% gain for the retailer’s namesake brand, while Hollister saw a 6% increase.

Gross profit rate improved 720 basis points during the quarter to 62.9% of sales. The year-over-year improvement was primarily driven by 430 basis points of higher average unit retail and 290 basis points associated with lower freight and raw material costs.

Operating income was $223M on an adjusted non-GAAP basis vs. $92M a year ago. EPS came in at $2.97 vs. $2.85 consensus and $0.81 a year ago.

A&F ended the quarter with an inventory position 7% lower year-over-year at $469M. On the balance sheet, ANF ended the quarter with a cash position of $901M and long-term gross borrowings under the company’s senior secured notes of $2223M. Liquidity, comprised of cash and equivalents and borrowing available under the ABL Facility, was reported at $1.2B.

CEO update: “Our strong fourth quarter was fueled by sales growth across regions and brands. Abercrombie brands grew net sales 35%, continuing an impressive multi-quarter growth trend, while Hollister brands grew 9%, delivering a third consecutive quarter of sales growth. By staying close to our customers, tightly controlling inventories and continuing to operate with financial discipline, our team delivered year-over-year fourth quarter operating margin expansion of 800 basis points, reaching 15.3%.”

Looking ahead, Abercrombie & Fitch (ANF) sees full-year net sales growth of +4% to +6%.

Shares of Abercrombie & Fitch (ANF) edged 0.19% higher premarket to $140.14.