Abercrombie & Fitch (A&F) is projecting faster sales growth and improved profit margins for the upcoming fiscal quarter, surpassing previous forecasts. The retail company anticipates a high-teens percentage increase in sales for the fourth quarter, exceeding expectations of a 14% rise compared to the same period last year.
CEO Fran Horowitz stated that A&F's women's business is expected to achieve its highest-ever fourth quarter sales, accompanied by accelerated growth in the men's segment. The positive outlook is attributed to enhanced product quality and more efficient inventory management, contributing to stronger profitability.
As a result of the anticipated performance, A&F has revised its full fiscal year expectations. Net sales for the year are now projected to grow between 14% and 15%, up from the previous estimate of 12% to 14%. The operating margin for the year is also revised upward to approximately 11%, compared to the initial forecast of 10%.
A&F's stock has experienced remarkable growth over the past year, surging by an impressive 285%. This exceptional performance has outperformed even the top performers in the S&P. The question now is whether the company can maintain this momentum moving forward.
In the first week of the new year, A&F's shares have already gained 2.6%, outperforming the S&P 500's 1.6% decline. The share price was up by 1.7% in premarket trading on Monday, reaching $92.03.
While many analysts were expecting a fourth-quarter update from A&F ahead of investor meetings at the ICR Conference, which takes place this week, the company's positive forecast has generated optimism in the market.
Overall, Abercrombie & Fitch is poised for robust sales growth and increased profitability, setting a promising tone for the upcoming fiscal quarter and full year.