Abercrombie & Fitch announced mixed results for the first quarter on Wednesday and provided guidance below expectations, attributing the lower sales to the conflict in the Middle East, which has “directly impacted” their performance.
The company’s Q1 highlights included:
- Record first quarter net sales of $1.1 billion, up 2% from last year, 14th consecutive quarter of growth
- Net sales growth led by Americas up 3%, APAC up 24%, partially offset by 10% decline in EMEA
- Brand performance led by Abercrombie brands growth of 3%, with Hollister brands flat
- Operating margin of 8.0%, with earnings per diluted share of $1.47 exceeding outlook range
- $105 million in shares repurchased in the quarter; 3% of shares outstanding at beginning of the year
- Maintains full-year outlook to net sales growth of 3% to 5%, net income per diluted share of $10.20 to $11.00, share repurchases of around $450 million
- Second quarter outlook of net sales growth of 2% to 4%, net income per diluted share of $1.80 to $2.00, at least $150 million in share repurchases
Fran Horowitz, Chief Executive Officer, said, “We delivered record first quarter net sales and our 14th consecutive quarter of growth, reflecting our teams’ consistent execution for our customers amid a dynamic global environment. Results were driven by continued growth in the Americas, led by Abercrombie Brands, along with strong growth in APAC. In EMEA, demand softened as the Middle East conflict ramped up, particularly impacting Hollister Brands, and we are proactively managing inventory and marketing to support the region. Our bottom-line results reflect discipline and consistency, with both operating margin and earnings per diluted share exceeding our outlook. We continued to invest in stores and marketing to strengthen our brands and customer experiences, while also returning $105 million to shareholders through share repurchases, supported by our strong balance sheet.
On our first-quarter progress, we are maintaining our full-year sales and operating margin outlook. With our customer at the center of everything we do and a strong foundation in place, we remain on offense across product and marketing and are confident in our path to deliver full-year net sales growth across brands, double-digit operating margins, strong cash flow and earnings per share growth to create long-term value for shareholders.”
Despite those challenges, shares jumped about 13% in morning trading following the release.
By CEO NA Editorial Staff
