The US clothing retailer Abercrombie & Fitch Co. also ended the second quarter of the 2022/23 financial year in the red. In the interim report published on Thursday, the company cited the ongoing weakness of the Hollister brand as the reason and also lowered its annual forecasts.
For the most recent quarter ended July 30, consolidated revenue was $805.1 million (EUR 807.9 million). It thus fell short of the corresponding prior-year level by seven percent (currency-adjusted -4 percent). The two divisions of the group developed very differently: While the Abercrombie segment with the brands Abercrombie & Fitch and Abercrombie Kids was able to achieve sales growth of five percent to 368.2 million US dollars, the revenues of the Hollister division, in which next Gilly Hicks and Social Tourist are also sold under the label of the same name, by 15 percent to 436.9 million US dollars.
Inflationary pressures have had a “greater than expected” impact on Hollister’s business, CEO Fran Horowitz admitted in a statement. In addition, “a shift away from the core categories towards more fashion-oriented products” weighed on the brand’s results.
Cost increases ensured that the clothing supplier slipped into the red as in the first quarter. The operating deficit was 2.2 million US dollars after an operating profit of 114.8 million US dollars had been achieved in the same quarter last year. The bottom line was a net loss attributable to shareholders of $16.8 million. In the same period last year, the company posted a surplus of $108.5 million.
Given the recent downtrend, management lowered its full-year guidance. It now expects sales to fall by a mid-single-digit percentage year over year. The target corridor had previously been between zero and +2 percent. Operating margin guidance has been lowered from 5-6 percent to 1-3 percent.