Abercrombie & Fitch reported third-quarter results that topped market expectations pushing the stock price up 17 percent before the opening bell Tuesday morning.
Net sales in the third quarter ended Nov. 1 rose 7 percent to $1.3 billion, from $1.2 billion in the year-ago period. Comparable sales increased 3 percent.
Sales at the Abercrombie brand were down 2 percent to $617.3 million, from $629.8 million in the year-ago quarter. But sales at the Hollister brand rose 16 percent to $673.3 million from $579.1 million in the year-ago quarter.
Operating income for the quarter slipped to $155 million from $179 million a year earlier. And operating margin decreased to 12 percent from 14.8 percent.
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Net income per diluted share tallied $2.36, down from $2.50 a year earlier.
The New Albany, Ohio-based specialty retailer narrowed its sales outlook for the year to 6 percent to 7 percent growth, from the previous outlook of from 5 to 7 percent growth. Net income is now seen ranging from $10.20 to $10.50 per diluted share, from the $10 to $10.50 previously forecast. The guidance on the operating margin remains the same, in the range of 13 percent to 13.5 percent.
“We achieved three years of consecutive quarterly sales growth, delivering record third-quarter net sales with 7 percent growth to last year,” Fran Horowitz, chief executive officer, said in a statement Tuesday morning.
“Hollister brands grew 16 percent on a strong finish to back-to-school and fall seasonal transition. Abercrombie brands made sequential progress in-line with our expectations, and we are tightly managing inventory as we aim for fourth quarter brand net sales to be approximately flat to last year’s record.
“On the bottom line, we delivered a 12 percent operating margin including important investments in marketing, digital and technology, in addition to 210 basis points of adverse tariff impact,” Horowitz said. “We exceeded our expectations on earnings per share, while also returning $100 million to shareholders in the third quarter, our seventh consecutive quarter of share repurchases.
“As we enter the holiday season, our global teams are energized and ready to deliver exceptional experiences for our customers across brands and regions,” Horowitz added. “We remain on track toward record net sales for fiscal 2025, on the foundation of consistent quarterly top-line growth, top-tier profitability and healthy cash flow. Our results reinforce the strength of our operating model and give us confidence in our ability to drive sustainable, long-term shareholder value.”
