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Abercrombie Registers Record Sales in Black Friday Week

Zacks Equity Research

Abercrombie & Fitch Co. ANF accomplished record revenues in the United States in the Black Friday week, including the period ranging from Tuesday before Thanksgiving through Cyber Monday. Following the outcome, the company reiterated its fourth-quarter fiscal 2019 view.

Moreover, the company’s Hollister brand performed outstandingly and set a new record in the holiday period. Meanwhile, its flagship brand continued to experience momentum and generated strongest top line over the five years. Further, management cited that Abercrombie’s comparable sales (comps) will outpace the Hollister’s, while the metric at the United States will outperform the international during fiscal fourth quarter.

Following the aforesaid news, shares of the apparel and other accessories retailer jumped about 4% during the trading session on Jan 13. In the past three months, Abercrombie’s shares have increased 18.8% compared with the industry’s 6.9% rise.


 

The Zacks Rank #3 (Hold) company is making significant progress in expanding its digital and omni-channel capabilities. Further, the company is progressing well on its goal of delivering integrated digital and in-store shopping experiences. Management is also committed to smoothly execute its transformation initiatives. Some of the latest actions include the launch of expanded payment options in the United States, a partnership with Klarna, the introduction of its China loyalty program in stores and on Tmall, the rebranding of the Abercrombie loyalty program, as well as offering Instagram checkout.

With that said, we expect these initiatives to contribute to Abercrombie’s top and bottom line in fiscal fourth quarter.

For now, the company continues to anticipate fiscal fourth-quarter net sales in the range of flat to up 2% from the prior-year quarter’s figure. This includes an adverse impact of nearly $5 million from negative currency translations. Meanwhile, it still projects comps to be flat to up 2%.

The company continues to expect gross margin contraction of 150 basis points (bps) from the year-ago quarter’s reported level of 59.1%. This will likely include negative impacts of 70 bps from currency and estimated China tariffs.

Further, Abercrombie continues to expect operating expenses (excluding other operating income) in the band of flat to up 2% from adjusted operating expenses of $555 million reported in fourth-quarter fiscal 2018.

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