Abercrombie & Fitch Co. soared after hiking its full-year guidance, a sign that some teens and young millennials are still eager to spend if the styles and price are right.
(Bloomberg) — Abercrombie & Fitch Co. soared after hiking its full-year guidance, a sign that some teens and young millennials are still eager to spend if the styles and price are right.
The bullish outlook also shows that the company’s Abercrombie & Fitch brand, a darling of young shoppers about a decade ago, is fashionable once again. The brand on Wednesday reported its highest-second quarter sales since 2011, executives said, and the 10th consecutive quarter of revenue growth.
Executives said dresses, Abercrombie’s Sloane tailored pant line, the YPB activewear line and apparel for men sold briskly in the most recent quarter — and that the momentum has continued into August.
“We are no longer a jeans and t-shirt brand,” Chief Executive Officer Fran Horowitz told analysts on an earnings call. “We really have expanded into a lot of categories. This young millennial can now wear this brand from work to their weekend getaway.”
Shares rose 21% when the market opened in New York to the highest level in a decade.
Abercrombie now sees net sales in the current fiscal year up 10% versus a previous forecast of 2% to 4%. Analysts had been expecting 4%. “Even with the guidance raise, we believe 2H guidance still looks conservative,” Citi analyst Paul Lejuez wrote in a research note.
He called Abercrombie & Fitch “the brightest star in the sky” given how well it’s performing versus most peers.
While some retailers like Kohl’s Corp. and Macy’s Inc. have been struggling to keep sales afloat as shoppers shift their spending away from goods and toward travel and entertainment, brands that are resonating with customers are still doing well. In a separate report on Tuesday, Urban Outfitters Inc. also reported better-than-expected growth in comparable sales in the most recent quarter.
Both Abercrombie and Hollister sold more merchandise with fewer promotions.
Hollister, a brand that caters to teens, had been a drag on Abercrombie’s overall performance until this quarter. “Our playbook is working,” Horowitz said on the earnings call.
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