Abercrombie (ANF) Witnesses Strong Holiday Season, Raises View
Abercrombie & Fitch Co. ANF has provided a positive business update ahead of its participation in the 2024 ICR Conference, scheduled for Jan 8-10, 2024. The company has noted that it witnessed a robust performance during the holiday season, backed by the continued positive response to its compelling product assortments and engaging marketing. Notably, it has witnessed a favorable demand trend through the first three quarters of fiscal 2023.
With the favorable business trends continuing into the current quarter, the company raised its net sales and operating margin outlook for the fourth quarter and fiscal 2023.
Shares of this Zacks Rank #1 (Strong Buy) company have rallied 245.3% in the past year compared with the industry’s growth of 13.1%.
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Brand Performance & Expectations
Abercrombie highlighted that the holiday season featured strong sales growth from each of its brands, particularly the Abercrombie brands. The company expects the women's business of the Abercrombie brand to attain the highest-ever fiscal fourth-quarter sales, complemented by augmented men's category growth. Additionally, ANF anticipates the Hollister brand to deliver year-over-year fiscal fourth-quarter sales growth, led by the women's business.
The Hollister brand is also on track for significant fiscal fourth-quarter gross profit margin expansion, attributed to improved product and inventory management. This aligns with the company's continued trend of profitable growth.
Outlook
Looking ahead, Abercrombie anticipates sustainable, profitable sales growth as it exits fiscal 2023, backed by numerous years of transformational investments in brands, people and the operating model. Moreover, it notes that the raised fiscal 2023 view puts it ahead of time to deliver on its financial targets under the Always Forward Plan 2025.
For fourth-quarter fiscal 2023, the company anticipates delivering net sales growth across regions, led by continued strength in the Americas. It expects fiscal fourth-quarter net sales growth in the high teens, a substantial uptick from previously mentioned low-double-digit growth. The operating margin for the fiscal fourth quarter is projected to be around 15%, up from the 12-14% mentioned earlier. The company retained its effective tax rate guidance of around 30%.
For fiscal 2023, Abercrombie anticipates net sales growth of 14-15%, ahead of previously stated 12-14% growth. The operating margin for the fiscal year is expected to be around 11% compared with around 10% stated earlier. The effective tax rate is likely to be in the low 30s in fiscal 2023, consistent with the earlier projection.
Other Stocks to Consider
Some other top-ranked companies in the Retail-Wholesale sector are Hibbett Sports HIBB, American Eagle Outfitters AEO and Deckers Outdoor DECK.
Hibbett, which provides products for individual and team sports across stores and online, currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for HIBB’s fiscal 2023 sales indicates 1.7% growth from the prior-year reported level. It has a trailing four-quarter earnings surprise of 24.2%, on average.
American Eagle, a specialty retailer of casual apparel, accessories and footwear for men and women, currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for American Eagle’s current fiscal-year sales and earnings suggests growth of 4.3% and 39.2%, respectively, from the year-ago reported numbers. AEO has a trailing four-quarter earnings surprise of 23%, on average.
Deckers, a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities, currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Deckers’ current financial-year sales and earnings implies growth of 11.7% and 21.9%, respectively, from the year-ago period’s actuals. DECK has a trailing four-quarter earnings surprise of 26.3%, on average.
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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
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