Abercrombie & Fitch raises guidance as Hollister brand boosts sales

Abercrombie and Fitch has increased its full-year outlook ranges on sales and operating margin after its Hollister brand helped boost company net sales 16% to $935m (£737m) during the three months ended 29 July 2023. The company said the results were driven by Abercrombie brands, up 26%, and its Hollister brand sales which increased 8% as it said its repositioning and assortment has started “paying off”. The group also reported an operating margin of 9.6%, a “significant expansion” from approximately break even last year. Meanwhile, it posted operating income of $90m (£70m )on a reported basis as compared with an operating loss of $2m (£1.5m) the previous year. CEO Fran Horowitz, said: “Our net sales and operating margin exceeded our expectations as global growth accelerated throughout the second quarter. We continue to see strong customer receptivity of our brands and product, led by 26% net sales growth in Abercrombie brands. To date, our efforts to evolve Hollister brands’ positioning and assortment are paying off, achieving a return to net sales growth at positive 8% for the quarter. “Both brands saw gross profit rate improvement on higher average unit retail and lower freight costs. Operating leverage from sales growth and gross profit rate performance contributed to an operating margin of 9.6%, a significant expansion from the second quarter of 2022. She added: “These strong results showcase the power of our playbook and our team’s ability to align product, voice, and experience to meet our customers’ needs. Operationally, we are strategically managing inventory, leveraging chase capabilities to support demand, and driving efficiency across our business. “While the macro environment remains dynamic, our first half results give us confidence to stay on offense for the second half. Consistent with our Always Forward Plan, we are continuing to open stores and make critical long-term investments in digital and technology that will keep our brands in position to exceed our customers’ expectations.”