The US clothing retailer Abercrombie & Fitch Co. ended the third quarter of the 2022/23 financial year in the red, but exceeded expectations overall. As a result, the company slightly raised its annual forecasts on Tuesday. At the same time, the Group announced that Chairman Terry Burman will resign from his post effective January 28, 2023 at the close of the current fiscal year. His successor is Nigel Travis, who is already a member of the Board of Directors.
For the third quarter ended October 29, consolidated revenue was $880.3 million, down 3 percent from the prior-year period. Adjusted for exchange rate changes, revenues remained more or less constant.
The Abercrombie division with the Abercrombie & Fitch brand and the children’s clothing line Abercrombie Kids was able to increase its sales by ten percent (currency-adjusted +13 percent) to 422.3 million US dollars. However, that was not enough to offset significant losses in the Hollister segment. Revenue for the division, which includes the Hollister, Gilly Hicks and Social Tourist labels, fell 12 percent (-9 percent at constant currency) to $457.8 million.
Higher freight and material costs also weighed on the result. The operating profit fell compared to the same period last year by almost 76 percent to 17.5 million US dollars. The bottom line was a net loss attributable to shareholders of $2.21 million, compared to a net profit of $47.2 million in the year-ago quarter.
In the first nine months of the current financial year, group sales amounted to almost 2.50 billion US dollars, which corresponded to a decline of two percent compared to the same period last year. Net loss attributable to shareholders was $35.5 million. In the first three quarters of the previous year, the clothing supplier was able to generate a profit of 197.5 million US dollars.
In view of the latest developments, CEO Fran Horowitz was “cautiously optimistic” about the upcoming holiday season. The forecasts for the year as a whole have therefore also been raised slightly: Management now only expects a drop in sales of two to three percent for 2022/23, after previously expecting a drop in the mid-single-digit percentage range. The operating margin target range, previously between 1 and 3 percent, has been narrowed down to 2 to 3 percent.