For the second quarter ended 29 July 2023, Abercrombie reported net sales of $935.3m, up 16% compared to last year on a reported basis and up 16% on a constant currency basis.
The operating income was $89.8m as opposed to an operating loss of $2.2m last year in the same period.
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While the net income increased to $58.7m from a net loss of $14.7m in the previous year.
Fran Horowitz, chief executive officer at Abercrombie, believes these strong results showcase the power of the company’s playbook and the team’s ability to align product, voice, and experience to meet customers’ needs.
Horowitz continues: “Our net sales and operating margin exceeded our expectations as global growth accelerated throughout the second quarter. We continue to see strong customer receptivity of our brands and products, led by 26% net sales growth in Abercrombie brands.”
Abercrombie & Fitch applies a chase strategy over a level strategy within its operations. Under the chase strategy, production is varied as demand varies. With the level strategy, production remains at a constant level in spite of demand variations. The use of a chase strategy requires that a company have the ability to readily change its output level, which means that it must be able to readily change its capacity.
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By GlobalDataHorowitz explains Abercrombie is strategically managing inventory, leveraging chase capabilities to support demand, and driving efficiency across businesses.
Commenting on an analyst call in the wake of the results announcement, Scott Lipesky, chief financial officer and chief operating officer at Abercrombie, said during the second quarter of 2023, the company evolved its operating model and structured it better to leverage the knowledge and experience of its regional teams to enable growth.
Lipesky shares the supply chain is in a good place with freight costs, shipping times and performance significantly better than last year. He says: “With a functioning supply chain, we can once again run the business the way we would like, leveraging chase to read and react and drive inventory receipts.”
Plans moving forward
Sharing the plan moving forward, Horowitz highlights that while the macro environment remains dynamic, the company’s first-half results give it the confidence to stay on offence for the second half.
Abercrombie plans to stay consistent with its Always Forward Plan. In line with the plan, it will continue to open stores and make critical long-term investments in digital and technology that Abercrombie says will keep its brands in a position to exceed customers’ expectations.
In addition to this, Horowitz is of the view that the regional operating model is a key growth enabler moving forward.
