Strong demand for Abercrombie brands boosts holiday quarter sales

Abercrombie & Fitch Co beat expectations for holiday quarter sales at established stores, driven by demand for its Hollister apparel and a rebound in sales at its Abercrombie brand after five years of declines.

The company’s shares, which have jumped over 70 percent in the past year, were up nearly 4 percent at $22.15 in premarket trading on Wednesday.

The Abercrombie brand posted a 5 percent rise in same-store sales, beating analysts’ average estimate of 2.13 percent, following a revamp of its clothing styles and stores.

The changes mirrored moves by rival Gap Inc, which also reported strong holiday quarter sales last week as shoppers bought more clothing from its major brands, especially Old Navy.

Teen fashion retailers, much like other brick-and-mortar retailers, have also been shutting stores and pouring more money in building their online operations to better compete with Amazon.com Inc.

Abercrombie said it expects to close 60 U.S. stores this year, but plans to open 21 full-price stores in fiscal 2018 with half of them in international markets.

Same-store sales at its beach-themed clothing brand Hollister rose 11 percent, the fifth straight quarter of increase. Analysts had expected a 10.35 percent rise, according to Thomson Reuters I/B/E/S.

Total comparable store sales rose 9 percent, beating the average expectation of a 7.4 percent rise.
Abercrombie also forecast same-store sales for fiscal year 2018 to be up low-single digits percentage.

Analysts are expecting an increase of 1.75 percent.

Net income attributable to Abercrombie rose to $74.2 million, or $1.05 per share, in the fourth quarter ended Feb. 3, from $48.8 million, or 71 cents per share, a year earlier.

Excluding one-time items, the company earned $1.38 per share, and reported a 15 percent rise in revenue to $1.19 billion.

Analysts on average had expected earnings of $1.10 per share and revenue of $1.16 billion in the reported quarter, according to Thomson Reuters I/B/E/S.