Abercrombie & Fitch shares plunged 15% in early trading after CEO Fran Horowitz warned of an “increasingly uncertain environment” despite the company reporting strong financial results for its fiscal second quarter. The apparel retailer posted a 21% revenue increase to $1.13 billion, surpassing Wall Street expectations of $1.10 billion. Earnings per share were $2.50, also exceeding the anticipated $2.22.
The company’s impressive sales growth builds on the 16% rise it achieved in the same period last year. This momentum led Abercrombie to raise its full-year sales guidance from 10% growth to a 12-13% increase. However, the full-year outlook remains aligned with analyst estimates, partly due to the impact of one fewer fiscal week in 2024, which is expected to reduce holiday quarter sales by $80 million.
Horowitz, known for her optimism in navigating economic challenges, highlighted the company’s disciplined approach to inventory and expenses while executing its global strategy. “We are on track and confident in our goal to deliver sustainable, profitable growth this year, while making strategic long-term investments,” she stated.
Despite the strong quarterly performance, the market reacted to Horowitz’s caution regarding economic uncertainty, with shares—up nearly 89% year-to-date before the announcement—dropping significantly.
Abercrombie’s growth was driven by an 18% increase in same-store sales, bolstered by strong summer and back-to-school demand. The company also saw a 17% sales jump at its Hollister brand and a 16% rise in the Europe, Middle East, and Africa division.
Looking ahead, Abercrombie is focusing on international expansion and partnerships, including a collaboration with Haddad Brands to extend its Abercrombie Kids line to infant and toddler categories, aiming to diversify its channels and sustain growth.
