Key Takeaways:
- Adjusted EPS of $1.47 beat consensus estimates of $1.28
- Net sales rose 2% to $1.1 billion, slightly below the $1.12 billion forecast
- EMEA sales fell 10% as the Iran conflict weighed on Hollister demand
Back
Abercrombie & Fitch beats Q1 profit estimates as Americas sales grow 3%
Abercrombie & Fitch reported Q1 adjusted profit of $1.47 a share, beating estimates by 19 cents, as Americas sales grew 3%.
"Our focus on affluent shoppers and targeted promotions helped us navigate a challenging consumer environment," CEO Fran Horowitz said in a statement.
Net sales rose 2% to $1.1 billion in the three months ended May 2, slightly below the $1.12 billion consensus compiled by LSEG. The Asia Pacific segment posted a 24% sales surge, while the Europe, Middle East and Africa segment fell 10%, hurt by the ongoing conflict with Iran that the company flagged in March.
Shares jumped 13% in morning trading, paring a year-to-date decline of more than 40%. The company maintained its full-year outlook, forecasting total sales growth in the current quarter and the full year despite the geopolitical headwinds.
Abercrombie has been targeting higher-income shoppers who continue spending freely, while discounts attracted value-conscious consumers from lower-income households. The strategy helped the company counter macroeconomic uncertainty in the U.S. and deliver the 3% sales gain in its Americas segment.
The apparel retailer's adjusted net income came in at $1.47 per share, well above the $1.28 analysts had expected. The company did not disclose a specific same-store sales metric in its release.
The EMEA weakness reflects a "slight sales hit" the company warned about in March as the Middle East conflict disrupted operations. Hollister, the company's teen-focused brand, bore the brunt of the regional slowdown.
The earnings beat suggests Abercrombie's strategy of bifurcating its customer base — courting affluent shoppers while discounting for budget-conscious buyers — is working despite macro headwinds. Investors will watch the Q2 results for signs of whether the EMEA drag deepens or stabilizes as geopolitical conditions evolve.
This article is for informational purposes only and does not constitute investment advice.
[1] Abercrombie shares jump 13% on earnings beat even as Iran conflict hits sales[2] Abercrombie & Fitch's continued sales growth offsets margin compression, mixed Q1 results[3] Abercrombie Logs Higher Sales Despite Softening Demand[4] Abercrombie & Fitch beats quarterly profit estimates on strong apparel demand[5] Abercrombie & Fitch sales fall. Why the stock is rising after earnings.
