In his new era of Abercrombie & Fitch Co. started about 10 years ago, the choice to review corporate policy and offering continues to pay off. Yesterday the US company reported the data of second quarter, exceeding analysts' expectations, and also increased sales forecast for the entire year. All positive data. But on the NYSE the stock falls heavily, probably due to profit taking, given its almost 100% run since the beginning of the year.
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Once known for its scented stores and shirtless models, the New Albany, Ohio-based company fell on hard times a decade ago, culminating in the ouster of then-CEO Michael Jeffries. It then managed to to rebuild one's soul and to climb back up the slope and in the last year Abercrombie has tripled its stock price.
The US group reported yesterday in second quarter revenue for 1,1 billion (equal to approximately 989 million euros), up 18%, and a Useful record operating, up 95% to 176 million (157,9 million euros) compared to the 90 million achieved in the same period of the previous financial year. The company was driven by the double-digit increases achieved in all markets and sales of both its brands, with Hollister up 15% and its flagship brand up 21%. In this context, the outlook for the entire financial year it was revised upwardsThe company now expects net sales growth of 12%-13% and operating margin of 14%-15%. Revenue is expected to be in the range of +12%-+13%.
The title on the Nyse -17%, in the afterhours -0,50%. Since the beginning of the year +92,5%
This was not enough to satisfy investors. Al Nyse after the data the title lost 17% yesterday, falling below $137 per share from an opening price of $146,99. and in post-closing trading is still showing a decline but limited a -0,50%. The company has however to its credit a +92,5% since the beginning of the year and it was the best performers among 15 companies in the S&P Composite 1500 Apparel Retail Index. In the last 5 years gained 486,04%Experts talk about profit taking.
“Our team continued to perform at a very high level in the second quarter, resulting in better-than-expected sales growth and profitability,” commented the CEO Fran Horowitz. “The strength of our brand portfolio and improvements in global capabilities drove broad-based growth. Consistent with the first quarter, we delivered improved profitability driven by gross profit rate expansion and operating leverage, with a second quarter operating margin of 15,5%.”
All markets record double-digit growth, even Asia
In detail, the Abercrombie brand generated revenues of 582,4 million dollars (522,3 million euros) and Hollister of 551,5 million (494,9 million euros). From a geographical point of view, the Americas posted revenue growth of 18%, equal to 901,2 million dollars (808,8 million euros), the EMEA area of 17% to 199,6 million (179,1 million euros) and the Asia-Pacific area of 21%, reaching 33 million (29,6 million euros). After closing the only store in Italy in Milan, in the very central Corso Matteotti which opened in 2019, A&F, reopened in 2022 a new Italian store in the Arese shopping center, in the province of Milan, “Il Centro”.
“While we continue to operate in an increasingly uncertain environment, we remain steadfast in executing our global playbook and maintaining discipline on inventory and expenses. We are confident in our goal of delivering sustainable, profitable growth this year, while making long-term strategic investments in marketing, digital and technology, and stores to secure future growth,” Horowitz concluded.
