Abercrombie & Fitch’s Initiatives Boost Sales Trajectory



Sales surpass estimates

Abercrombie & Fitch (ANF) has witnessed sales growth in all three quarters of fiscal 2017 as its strategic initiatives gain traction. In fiscal 3Q17, the company reported sales of $859.1 million, which was ahead of analysts’ estimate of $818.9 million and a rise of 4.5% YoY (year-over-year). Strength in the Hollister brand and D2C (direct-to-consumer) sales have been the driving factors. The company has also beat analysts’ estimates in the past two quarters.

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For fiscal 4Q17, Abercrombie & Fitch expects sales to grow in the mid to high single digits, which includes the additional 53rd week this year. The company expects to generate $38 million in the 53rd week. Analysts expect the company to report $1.1 billion in sales in fiscal 4Q17, reflecting a YoY growth of 6.1%.

Hollister, e-commerce gaining ground

To protect itself from the growing clout of online retailers such as Amazon (AMZN), Abercrombie & Fitch has been making investments to boost its e-commerce business. Its D2C (direct-to-consumer) sales grew 11% YoY, representing 24% of its total sales in fiscal 3Q17. A bulk of the traffic on its D2C channel was driven by mobile.

Looking at brands, revamping the Hollister brand has come to fruition. In fiscal 3Q17, the brand’s sales increased 10% to $508.1 million, driven by strength witnessed in the jeans category. The company continues to boost the productivity of its Hollister store base and has so far remodeled 33 store interiors.

Where do peers’ sales stand? 

In comparison, American Eagle (AEO) marginally missed analysts’ estimate for fiscal 3Q17, but sales rose 2.1% YoY due to strength in e-commerce. Just like Abercrombie, Gap (GPS) is another specialty retailer whose strategic actions have resulted in a good quarterly performance. For fiscal 3Q17, Gap sales handily beat the estimates and increased 1.1% YoY.

Let’s take a look next at Abercrombie & Fitch’s margins.


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