The US clothing retailer Abercrombie & Fitch Co. presented sobering figures for the first quarter of the 2022/23 financial year on Tuesday. Although sales exceeded analyst forecasts, the bottom line was an unexpected loss. The company justified the red figures primarily with the recently exceptionally high freight and raw material costs.
In the first quarter, which ended on April 30, group sales amounted to 812.8 million US dollars (758.6 million euros). It thus exceeded the corresponding level of the previous year by four percent. The clothing supplier achieved slight growth in the USA (+6 percent, 585.1 million US dollars) and in the EMEA region, which includes Europe, the Middle East and Africa (+3 percent, 164.0 million US dollars). In the Asia-Pacific region, however, sales fell by 35 percent to USD 29.9 million due to the tightened corona protection measures in China. On the other hand, the company was able to grow strongly in the rest of the world: sales there increased by 50 percent to 33.8 million US dollars.
The growth engine was the Abercrombie segment with the brands Abercrombie & Fitch and Abercrombie Kids, whose revenues rose by 13 percent to 383.9 million US dollars. The Hollister division, which also includes Gilly Hicks and Social Tourist in addition to the label of the same name, had to accept a drop in sales of 3 percent to 428.8 million US dollars.
The increase in freight costs caused the gross margin to slip, and spending on marketing measures and online sales also increased. These factors resulted in an operating loss of $9.73 million after the apparel retailer posted an operating profit of $57.4 million in the year-ago quarter. The net loss attributable to shareholders was $16.5 million. A year ago, Abercrombie & Fitch reported a corresponding surplus of 41.8 million US dollars.
CEO Fran Horowitz acknowledged that “headwinds” due to high costs are still to be expected until the end of the year. The management lowered its forecasts for the entire financial year: The target range for sales growth is now between zero and two percent, after an increase of two to four percent had previously been expected. Operating margin guidance has been downgraded from 7% to 8% to 5% to 6%. The group justified the corrections with higher freight and material costs, negative currency effects and the expected impact of the currently high inflation on demand.