The US clothing group Abercrombie & Fitch Co. achieved surprisingly significant growth in sales and earnings in the second quarter of the 2023/24 financial year. Due to the positive development, management raised its forecast for the year sharply on Wednesday. The company’s share price jumped more than 15 percent.
For the 13 weeks ended July 29, consolidated revenue was $935.3 million, a 16 percent increase over the same quarter last year.
The Hollister segment is back on course for growth
Both segments of the group of companies contributed to the significant growth. In the Abercrombie division, with the core brand Abercrombie & Fitch and the children’s clothing line Abercrombie Kids, sales increased by 26 percent to 462.7 million US dollars.
The Hollister division, which had to accept a drop in sales in recent quarters, also returned to growth: the segment, which includes the labels Hollister, Gilly Hicks and Social Tourist, achieved an increase of eight percent (currency-adjusted +7 percent) to 472 $.6 million.
Higher annual forecasts boost the share price
In addition to the strong sales growth, a higher gross margin and a relatively small increase in operating costs contributed to the apparel retailer being in the black compared to the prior-year period. Operating income was $89.8 million, down from an operating loss of $2.2 million a year ago.
The bottom line was net income attributable to shareholders of $56.9 million. The group had closed the same period last year with a corresponding deficit of 16.8 million US dollars.
The current figures prompted the management to raise the forecasts for the entire financial year significantly. It now expects sales to grow by around 10 percent to $3.7 billion. Previously, only an increase of two to four percent had been expected. The target for the operating margin, which was previously five to six percent, has been increased to eight to nine percent.