For the quarter ending 28 October 2023, the company's comparable sales also saw an impressive 16% rise.
Abercrombie & Fitch CEO Fran Horowitz said: “For the sixth consecutive quarter, our global team delivered double-digit net sales growth. This great sales performance led to better-than-expected results on both the top and bottom lines. With broad-based growth across regions and brands, we continue to execute at a high level, leveraging our regional playbooks and operating model.”
The retailer's net income surged to $133.86bn, representing 11.1% of net sales, with earnings per diluted share climbing to $2.50 from $1.83 in Q3 FY23.
Gross profit of Abercrombie & Fitch stood at $786.93m in Q3 FY24, indicating a gross profit rate of 65.1%, which is approximately 20 basis points (bps) higher than the previous year.
In the earnings call, the company noted it experienced higher freight costs as a result of increased air transportation and rising freight rates, which affected gross profit margins. Additionally, it continues to face challenges in managing a fluctuating shipping market and the potential impact of tariffs.
The retailer’s operating expenses, excluding other operating income or loss, were reported at $609m for the quarter, up from $546m last year. However, as a percentage of sales, these costs improved to 50.4% from 51.7%. Operating income rose to $179m compared to last year's $138m.
Regionally, each area experienced double-digit growth during the quarter, with the Americas up by 14%, Europe, the Middle East and Africa (EMEA) by 15%, and Asia–Pacific leading with a 32% increase. Both Abercrombie brands and Hollister recorded growth-on-growth, with comparable sales up by 11% and 21%, respectively during the quarter.
“Based on our third quarter outperformance and outlook for the fourth quarter, we are increasing our full year outlook on sales and expect to be around the high end of the operating margin range shared last quarter. Our teams are engaged and ready to deliver for our customers this holiday season with the goal of achieving sustainable, profitable growth firmly in our sights,” Fran Horowitz added.
For FY24, net sales is anticipated to grow by 14% to 15%, an increase from the previously projected range of 12% to 13%.
The company expects an operating margin of around 15%, slightly up from the previous forecast of 14% to 15%.
Abercrombie & Fitch, an omnichannel specialty retailer of apparel and accessories, operates approximately 770 stores under its namesake and Hollister brands across North America, Europe, Asia and the Middle East.
The company intends to leverage strong brand performance and customer engagement by opening new stores in key locations, particularly in the Greater London area and internationally, to enhance its presence in local markets.
