Abercrombie & Fitch carved lower despite clearing Q2 estimates Wednesday morning and hiking its outlook, as a shorter fiscal year should still impact sales. Kohl's and Foot Locker also reported in the morning, while Victoria's Secret, and Five Below release results after the close. Lululemon and Birkenstock headline Thursday's reports, while Ulta Beauty, Burlington and discount stores are also due. Meanwhile, analysts lifted price targets on Nordstrom slightly after the company late Tuesday beat Q2 expectations. Still, JWN stock surged early Wednesday.
Abercrombie & Fitch reported a 127% increase in earnings to $2.50 per share, marking six consecutive quarters of triple-digit earnings growth. Revenue spiked 21% to $1.13 billion. Sales growth slowed slightly after accelerating over the last four quarters.
FactSet expected earnings of $2.22 per share on $1.1 billion in revenue.
Abercrombie brand sales jumped 26% during the quarter while the Hollister brand saw sales increase 17%.
Overall comparable sales increased 18% for the quarter, outpacing analysts estimates of 16.4% growth and rising from a 13% gain last year.
Inventories as of Aug. 3 were $540 million, up from $469 million as of Feb. 23 and $493 million from July 29, 2023, respectively.
CEO Fran Horowitz said the company continues to operate "in an increasingly uncertain environment."
Still, Abercrombie lifted its 2024 sales outlook to range from 12% to 13% growth, from its prior expectation of about 10% growth. The new outlook is ahead FactSet forecasts for 11.8% growth.
For the third quarter, Abercrombie guided Q3 sales to increase in the low-double digits from $935 million in Q3 2023. However, FactSet expects a 23% increase to $1.15 billion.
The company's 2024 fiscal year also includes one fewer week than fiscal 2023. Abercrombie expects the loss of a selling week to result in an $80 million impact to Q4 sales, or 5.5 percentage points. For the year, the retailer expects it to hit sales by $50 million, or 1.2 percentage points.
Elsewhere, Abercrombie & Fitch on Aug. 22 expanded its board of directors to 10 members with the appointment of Andrew Clarke, global president of Mars Snacking.
Citi on Aug. 20 opened a "positive catalyst watch" on Abercrombie stock ahead of its report, The Fly reported. The firm expects a strong earnings beat, driven by muscular sales and margins. Citi believes both the Abercrombie & Fitch brands and Hollister continued to have double-digit comparable sales momentum during the quarter, with an acceleration in Hollister Men's. Meanwhile, both brands are on the right side of fashion trends, the firm wrote. Citi maintained a neutral rating on Abercrombie stock with a 190 buy point.
Abercrombie Stock
Abercrombie tumbled nearly 17% Wednesday. Shares rose less than 1% Tuesday.
Still, Abercrombie shares vaulted 57% so far this year.
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Kohl's, Foot Locker also reported early Wednesday. Victoria's Secret, and Five Below report after the close.
Foot Locker reported a loss of 5 cents per share adjusted, edging out views for a 7 cent loss. Revenue ticked up 1.9% to $1.89 billion, also just ahead of forecasts for $1.88 billion. The company also announced plans to close its stores and ecommerce operations in South Korea, Denmark, Norway and Sweden, while transferring operations in Greece and Romania. All together, 30 stores will be affected and the changes are expected to be completed in mid-2025. Foot Locker maintained its full-year guidance.
Foot Locker stock carved 10% lower Wednesday. Shares were trading just below a 33.24 buy point for a cup-with-handle base prior to results. Wednesday's decline puts FL stock in danger of dropping below the maximum handle decline of 12%.
Lululemon, American Eagle Outfitters, Birkenstock, Ulta Beauty and Burlington report Thursday, along with discount stores Dollar General and Ollie's Bargain Outlet.
Birkenstock shares are trading in a buy zone for a flat base, above a 61.83 buy point.
OLLI stock is working on a cup base with a 104.98 buy point.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
