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Apparel Retailers Have Delivered Strong Top Line Growth

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Abercrombie & Fitch

Abercrombie & Fitch (ANF) delivered YoY (year-over-year) sales growth in both the first and second quarters of fiscal 2018 (with its second quarter ending on August 4). Strength in the sales of its Hollister and Abercrombie & Fitch brands, international operations, and direct-to-customer sales were the company’s primary growth catalysts.

In the first quarter of fiscal 2019, the company’s sales of $730.9 million rose 11% and beat analysts’ projection by 5.1%. In the second quarter, sales were up 8% to $842.4 million but marginally missed the estimate. For fiscal 2018, the company expects its sales to increase in the range of 2%–4%. Analysts expect ANF’s fiscal 2018 sales to rise 2.2% to $3.6 billion.

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American Eagle Outfitters

American Eagle Outfitters (AEO) beat the revenue estimates for both its first and second fiscal quarters while reporting YoY growth of 8.0% and 14.2%, respectively. Strength in American Eagle and Aerie, along with its fast-growing digital business, drove the company’s top line. AEO’s management remains confident that Aerie will surpass $1.0 billion in sales. The intimate apparel brand is expected to benefit from the body positivity movement. Analysts expect its revenue to rise 6.5% to $4.0 billion.

L Brands

L Brands (LB) reported sales that were ahead of analysts’ estimates in both the first and second quarters of fiscal 2018. On a YoY basis, its sales were up 7.8% and 8.3%, respectively, in the quarters. The company’s beauty business (which includes the Victoria’s Secret and Bath & Body Works brands) along with the calendar shift resulted in strong top line numbers. However, Victoria’s Secret’s lingerie business remains troubled. For fiscal 2018, its sales are expected to be up 3.9% to $13.1 billion.

Urban Outfitters

Urban Outfitters (URBN) reported sales growth of 12.4% to $855.6 million in the first quarter of fiscal 2019, while in the second quarter of fiscal 2019 (which ended on July 31), its sales grew 13.7%. Sales beat estimates in both quarters.

Apart from its growing digital business and strengthening brands (Free People, Urban Outfitters, and Anthropologie), URBN’s management is looking to expand in overseas territories. For fiscal 2019, its sales are expected to rise 9.7% to ~$4.0 billion.

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