Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Abercrombie and Fitch's (NYSE:ANF) Q4 Sales Beat Estimates But Stock Drops

Published 2024-03-06, 07:36 a/m
Abercrombie and Fitch's (NYSE:ANF) Q4 Sales Beat Estimates But Stock Drops
ANF
-

Stock Story -

Young adult apparel retailer Abercrombie & Fitch (NYSE:ANF) reported Q4 FY2023 results exceeding Wall Street analysts' expectations, with revenue up 21.1% year on year to $1.45 billion. It made a non-GAAP profit of $2.97 per share, improving from its profit of $0.81 per share in the same quarter last year.

Is now the time to buy Abercrombie and Fitch? Find out by reading the original article on StockStory.

Abercrombie and Fitch (NYSE:ANF) Q4 FY2023 Highlights:

  • Revenue: $1.45 billion vs analyst estimates of $1.43 billion (1.5% beat)
  • EPS (non-GAAP): $2.97 vs analyst estimates of $2.85 (4.4% beat)
  • Guidance for full year 2024 slightly ahead for revenue and operating profit
  • Free Cash Flow of $145.5 million, down 42.9% from the same quarter last year
  • Gross Margin (GAAP): 62.9%, up from 55.7% in the same quarter last year
  • Same-Store Sales were up 16% year on year (roughly in line)
  • Market Capitalization: $7.05 billion
Fran Horowitz, Chief Executive Officer, said, “I am incredibly proud of how we performed throughout fiscal 2023, finishing with fourth quarter year-over-year net sales growth of 21%, which exceeded our January business update expectations. Our strong fourth quarter was fueled by sales growth across regions and brands. Abercrombie brands grew net sales 35%, continuing an impressive multi-quarter growth trend, while Hollister brands grew 9%, delivering a third consecutive quarter of sales growth. By staying close to our customers, tightly controlling inventories and continuing to operate with financial discipline, our team delivered year-over-year fourth quarter operating margin expansion of 800 basis points, reaching 15.3%.

Founded as an outdoor and sporting brand, Abercrombie & Fitch (NYSE:ANF) evolved to become a specialty retailer that sells its own brand of fashionable clothing to young adults.

Apparel RetailerApparel sales are not driven so much by personal needs but by seasons, trends, and innovation, and over the last few decades, the category has shifted meaningfully online. Retailers that once only had brick-and-mortar stores are responding with omnichannel presences. The online shopping experience continues to improve and retail foot traffic in places like shopping malls continues to stall, so the evolution of clothing sellers marches on.

Sales GrowthAbercrombie and Fitch is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the other hand, it has an edge over smaller competitors with fewer resources and can still flex high growth rates because it's growing off a smaller base than its larger counterparts.

As you can see below, the company's annualized revenue growth rate of 4.3% over the last four years (we compare to 2019 to normalize for COVID-19 impacts) was weak , but to its credit, it opened new stores and grew sales at existing, established stores.

This quarter, Abercrombie and Fitch reported remarkable year-on-year revenue growth of 21.1%, and its $1.45 billion in revenue topped Wall Street's estimates by 1.5%. Looking ahead, Wall Street expects sales to grow 4.3% over the next 12 months, a deceleration from this quarter.

Same-Store Sales Abercrombie and Fitch's demand within its existing stores has generally risen over the last two years but lagged behind the broader consumer retail sector. On average, the company's same-store sales have grown by 6.8% year on year. With positive same-store sales growth amid an increasing physical footprint of stores, Abercrombie and Fitch is reaching more customers and growing sales.

In the latest quarter, Abercrombie and Fitch's same-store sales rose 16% year on year. This growth was an acceleration from the 2.3% year-on-year increase it posted 12 months ago, which is always an encouraging sign.

Key Takeaways from Abercrombie and Fitch's Q4 Results We were impressed that Abercrombie and Fitch beat on revenue, gross margin, and EPS. Full year guidance for revenue and operating profit were also slightly ahead of expectations. Overall, we think this was a strong quarter that should satisfy shareholders. The stock is flat after reporting and currently trades at $139 per share.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.