Abercrombie & Fitch released its third quarter earnings report before opening bell this morning, posting adjusted earnings of 48 cents per share, which smashed the consensus estimate of 22 cents per share. Sales were $878.6 million, again beating the consensus at $864.65 million and coming in flat with last year’s net sales on a constant currency basis. In last year’s third quarter, the fashion brand retailer reported adjusted earnings of 42 cents per share.
Abercrombie & Fitch posts wider profit
Abercrombie’s adjusted earnings include a negative impact of 13 cents per share due to currency exchange. Reported earnings were 60 cents per share, compared to last year’s 25 cents. Comparable store sales declined 1% year over year, although sequentially, comparable sales increased in all brands and regions.
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According to brand, net sales fell 6% year over year to $411.3 million for Abercrombie but were flat at $467.3 million for Hollister. According to region, net sales fell 4% to $572.7 million in the U.S. and 3% internationally to $305.8 million. Direct-to-consumer and omnichannel sales were about 21% of the total net sales for the quarter.
Management said they have seen positive trend sand remain focused on managing expenses, which resulted in an improvement in adjusted operating income in constant currencies in the third quarter.
“Our third quarter results exceeded our expectations coming into the quarter and provide the strongest validation yet that our initiatives are working, said Abercrombie & Fitch Executive Chairman Arthur Martinez in a statement. “We have seen positive customer response to the actions we have been taking on a number of fronts. We saw continued sequential improvement in comparable sales, led by positive comparable sales for our Hollister brand and across our international business.”
Abercrombie & Fitch updates guidance
For the fourth quarter, Abercrombie & Fitch expects comparable store sales to be about flat with last year and the gross margin to be about flat with last year on a constant currency basis. The clothing retailer expects currency headwinds to continue during the quarter.
Shares of Abercrombie & Fitch surged in premarket trading after this morning’s earnings report, climbing by more than 18% to $23 per share.