Abercrombie & Fitch Stocks Rises as Earnings Show Consumers Still Spending on Clothes

Abercrombie & Fitch stock has advanced more than 9% this month but has fallen 13% this year. (David Paul Morris/Bloomberg)

Shares of Abercrombie & Fitch sharply advanced after the clothing retailer’s fiscal second-quarter earnings and profit outlook came in above expectations even as sale-store sales remained under pressure.

The company on Wednesday posted adjusted earnings of $4.17 a share in the quarter ended Aug. 2, up from $2.32 a year ago and well above Wall Street’s expectation for $1.99. Net sales grew 5% to $1.27 billion, just beating the analyst consensus call for $1.25 billion, according to FactSet.

The company’s quarterly profit included $1.75 a share benefit from tariff refunds.

Management said in the earnings release that growth was balanced across its brands and regions, with increased momentum in the Americas and “improving trends” in Europe, the Middle East, and Africa.

Comparable sales were flat from a year ago but slightly accelerated from a 1% decline in the fiscal first quarter. Wall Street was looking for a 0.8% increase. The company’s same-store sales for its Abercrombie business increased 4% while same-store sales for Hollister decreased 3%.

Abercrombie & Fitch expects fiscal third-quarter net income between $2.90 to $3.20 a share with net sales growing between 5% and 6%. Wall Street forecasts third-quarter earnings of $2.82 a share.

For the fiscal year, the company expects net sales to grow about 5% with net income between $13.10 to $13.60 a share. The new income guidance is above the analyst consensus prediction of $10.72 a share.

Abercrombie & Fitch previously forecast fiscal-year net income of $10.20 to $11 a share with net sales growing between 3% and 5%.

Abercrombie & Fitch stock rose 11% to $121.36 in premarket trading on Wednesday after ending Tuesday down 3% as many retailer stocks came under pressure. Shares were up 9.4% this month but have declined 13% this year as of the closing bell on Tuesday.

Write to Kit Norton at kit.norton@barrons.com

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