Abercrombie & Fitch Co. Posts Strong Q4 and 2024 but Investors Want More in 2025
Updated 4:18 p.m. ET March 5
At Abercrombie & Fitch Co., the momentum continues.
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On Wednesday, the New Albany, Ohio-based specialty retailer reported net income for the quarter ended Feb. 1 rose 11.8 percent to $187.2 million, or $3.57 a diluted share, from $158.4 million, or $2.97 a diluted share, in the year-ago period.
Operating income rose 16.2 percent to $256 million as compared to operating income of $223 million in the year-ago quarter.
Net sales rose 9 percent to $1.58 billion from $1.45 billion in the year-ago period. Comparable sales were up 14 percent.
By division, Abercrombie sales rose 2 percent to $772.67 million from $755.2 million in the year-ago period. Hollister sales rose 16 percent to $812.25 billion from $697.7 million in the year-ago period.
Regionally, the Americas did the best last quarter, with sales rising 11 percent. EMEA (Europe, the Middle East and Africa) rose 2 percent, while APAC (Asia-Pacific) was down 4 percent.
For 2025, the company projects sales growth of 3 to 5 percent, and net income per diluted share in the range of $10.40 to $11.40.
For the first quarter of this year, the company projects sales growth in the range of 4 to 6 percent and net income per diluted share in the range of $1.25 to $1.45.
Apparently, Wall Street wants to see bigger gains going forward. The stock price closed down 9.3 percent, or $8.92, to $87.19 on Wednesday. Investors would also be concerned about the impact of new tariffs on Canada, Mexico and China triggered by the Trump administration, inflation and consumers pulling back on spending.
“In fiscal 2024, we once again delivered on our commitments to our global customers and shareholders,” Fran Horowitz, chief executive officer, said in a statement Wednesday morning. “We entered the fiscal year with the goal of achieving sustainable, profitable growth on top of a defining fiscal 2023, and our collective effort and focus produced results well beyond our initial expectations. We grew net sales 16 percent to nearly $5 billion while expanding operating margin to 15 percent, with operating income and earnings per share growth of 53 percent and 72 percent, respectively.
“We enter fiscal 2025 with highly relevant brands, an agile playbook and a motivated global team driven by a culture of innovation and growth,” Horowitz added. “Our expectation in 2025 is to build on the past two years of outstanding results and again deliver profitable growth while strengthening our brands and operating model.”
Last year, the company’s “read and react inventory model,” which is geared to enable chasing more inventory of hot items and categories “was critical to our success in 2024,” Horowitz said during a conference call with retail analysts and investors. “We chased millions of units, enabling us to align our inventory receipts with our customers’ needs and preferences. Read and react supports our business in many ways, and is a core principle in how we run our merchandising, planning, sourcing, supply chain and marketing functions.”
So far for the first quarter this year, sales of jeans and fleece continue to sell well following a strong holiday season, Horowitz said during a conference call with retail analysts and investors, adding, “We’re starting to see dresses turn on and skirts turn on. We’re even seeing swim turn on already.”
For spring, Hollister is off to a better start than Abercrombie. “Last year we had a flawless transition into spring, and this year it’s a bit more normalized,” Horowitz said. “We [were] positive for February, and seeing a little bit of a difference between the brands. Hollister is coming off a very strong [fourth quarter] and Abercrombie is a bit negative, but we are seeing spring products turning on in Abercrombie. We’ve got some nice green shoots out there.”
The company does expect some impact during the first half from higher freight costs, and around $5 million from new tariffs, but with the retail pricing of products, “We currently don’t intend to take any significant or make any significant changes,” due to higher costs from tariffs. “We source in 17 countries around the world.…We are very proud of our agile sourcing and the opportunity to be able to move the product,” Horowitz said.
The CEO cited several significant growth maneuvers this year expected to sustain the company’s momentum, among them delivering around 100 new store “experiences,” which is a mix of store openings, remodels and right-sizings. Last year, there were 125 new store experiences rolled out, Horowitz said, noting the store channel delivered a four-wall operating margin of around 30 percent.
“For digital we continue to find opportunities to improve the customer experience around speed, product discovery and localization,” Horowitz said. “We will also invest in technology to enhance the shopping experience across channels.
She also said through wholesaling, franchising and licensing, “We see potential to introduce our brands to new customers and drive long-term shareholder value in 2025. We expect initial store openings and product launches for the partnerships we announced this past year, such as our Abercrombie kids partnership with Haddad Brands, and our entry into India under franchise agreement.” Abercrombie & Fitch last August disclosed its partnership with Haddad, a privately held, New York-based family business specializing in children’s apparel and accessories, to expand the Abercrombie kids brand globally, and last December, said it would enter India through a multiyear, franchise partnership with Myntra Jabong India Private Ltd.
Further opportunities are seen overseas. “I was just in London to the opening of our Oxford Street store, and I was so impressed and energized by the customer response,” Horowitz said. “We have successfully tested multiple brand reintroduction efforts in the U.K. and, more recently, moved to increase our brand engagement in Germany.”
In other news, the company announced a $1.3 billion share repurchase authorization.
For all of 2024, A&F generated $4.95 billion in sales, up 16 percent from $4.28 billion in 2023. Comparable sales rose 17 percent.
By division, Abercrombie’s sales rose 16 percent to $2.56 billion from $2.2 billion in 2023. Hollister’s sales rose 15 percent to $2.39 billion from $2.07 billion.
The company ended its fiscal year with 511 Hollister stores and 278 A&F stores.
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