Abercrombie & Fitch at 10-year highs after outlook upgrade!

Abercrombie & Fitch (ANF.US) is one of the best performing Wall Street companies today. US clothing retail released a solid earnings report for fiscal-Q2 2024 (May-July 2023) and issued an upbeat outlook for the full fiscal-2024.

Company reported a 16% YoY jump in fiscal-Q2 net sales, to $935.3 million (exp. $846.4 million). Sales were split almost equally between Abercrombie and Hollister segments, with the former enjoying a 26% YoY growth. Adjusted EPS came in at $1.10 and was much higher than $0.16 expected. Company saw better than expected results in all geographic regions. Company also reported an almost-700 basis point beat in operating margin.

Forecasts for the current quarter - fiscal-Q3 2024 (August-October 2023) - were also upbeat with the company expecting operating margin to more or less match fiscal-Q2 and sales to grow at a double-digit pace. Guidance for the full fiscal year was boosted and now calls for a 10% jump in net sales and full-year operating margin of 8-9%.

Fiscal-Q2 2024 results

• Net sales: $935.3 million vs $846.4 million expected (+16% YoY)
  • Abercrombie net sales: $462.7 million vs $419.5 million expected (+26% YoY)
  • Hollister net sales: $472.6 million vs $427.6 million expected (+8.2% YoY)
• Adjusted EPS: $1.10 vs $0.16 expected (-$0.30 a year ago)
• Gross margin: 62.5% vs 60.4% expected (57.9% a year ago)
• Operating margin: 9.6% vs 2.7% expected  (-0.3% a year ago)

Fiscal-Q3 2024 forecast

• Net sales: 'up low double-digits' vs 3% expected
• Net operating margin: 8-10%

Full-year fiscal-2024 forecast

• Net sales: +10%, up from previous forecast of +2-4% (exp. +4%)
• Operating margin: 8-9%, up from previous forecast of 5-6%
• Capital Expenditures: around $160 million

Abercrombie & Fitch (ANF.US) trades 23% higher today and reaches the highest level in 10 years! A look at the weekly chart shows how steep this week's gains are (orange circle at the chart below). Stock even tested a long-term resistance zone ranging below $52.50 mark earlier today but bulls failed to break above it and part of gains was trimmed.

Source: xStation5