(Reuters) -Abercrombie & Fitch lifted its annual sales forecast on Tuesday, betting on strong demand at its namesake label and its teen-focused Hollister brand during the crucial holiday shopping season.
The company has doubled down on refreshing its product lines across denims, dresses and seasonal offerings as consumers remain picky and earmark their dollars for smaller luxuries such as jeans and in-vogue handbags.
The strategy has helped Abercrombie beat sales estimates for nine straight quarters, driving a 75% surge in the retailer’s shares this year.
On the day, however, its stock lost 4% in premarket trading, tracking declines in the sector driven by bleak holiday forecasts from Kohl’s and Best Buy.
Retailers including Walmart and Target have forecast a mixed holiday season ahead of this year’s Black Friday and Christmas, as consumers hold back on big purchases and wait for the best prices and deals.
In contrast, Abercrombie raised its fiscal 2024 net sales growth forecast to between 14% and 15%, compared with 12% to 13% expected earlier.
It also recorded a double-digit jump in sales across each of its regions in the third quarter, with the Americas growing 14%, Europe, Middle-East and Africa growing (EMEA) 15% and Asia-Pacific region growing 32%.
Along with easing production expenses and lower soft cotton costs, full-price sales have helped Abercrombie drive up its gross profit margin by 20 basis points to 65.1%.
Net sales at the company rose 14% to $1.21 billion in the third quarter, compared with analysts’ estimates of $1.19 billion, according to data compiled by LSEG.
Excluding items, it reported a profit of $2.50 per share, compared with estimates of $2.39.
Separately, the company named insider Robert Ball as chief financial officer, succeeding Scott Lipesky, who was promoted to the role of chief operating officer in 2023.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Devika Syamnath)
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