Abercrombie & Fitch forecasts upbeat revenue growth on strong apparel demand
By Juveria Tabassum
(Reuters) -Abercrombie & Fitch Co on Wednesday forecast full-year revenue growth above Wall Street estimates, as it bets on strong full-price demand for its apparel brands on the back of a robust holiday shopping season and a strong start to spring in the United States.
Apparel retailers such as Abercrombie and Lululemon Athletica have benefited from efforts to trim inventories and introduce fresh styles on their racks during the holiday season.
Abercrombie said it ramped up marketing and invested in digital and in-store experiences to appeal to customers in the reported quarter – moves it expects to stick to for the rest of the year.
Big-box retailer Target also said on Tuesday that it would bank on improved consumer experiences to keep shoppers engaged in a choppy spending environment.
Abercrombie forecast first-quarter net sales growth in the low double digits, better than market estimates, and said that it had seen "great product reactions" to its spring collection so far.
While fewer discounts and easing costs of shipping and raw material such as cotton bolstered Abercrombie's margins, the company said it could log higher shipping costs in the second quarter and back half of the year as a result of the conflict in the Red Sea.
Abercrombie expects net sales growth between 4% to 6% for fiscal year 2024, ahead of the LSEG estimate of 4% growth to $4.43 billion.
"The A&F brand remains healthy with a more resilient customer base and strong assortment," said Telsey Advisory Group analyst Dana Telsey, adding that digital growth could drive further margin expansion for the company.
Abercrombie's posted fourth-quarter revenue of $1.45 billion, topping analysts' expectations of $1.43 billion.
Excluding items, Abercrombie earned $2.97 per share, ahead of estimates of $2.83 per share.
Shares of the retailer were down marginally in choppy early trade. They had nearly quadrupled last year and are up about 60% so far this year.
(Reporting by Juveria Tabassum; Editing by Shinjini Ganguli and Shailesh Kuber)
