Shares in American Eagle Outfitters and Abercrombie & Fitch rose on Thursday after both retailers raised their full-year profit forecasts, defying worries about slowing consumer spending amid decades-high inflation.
**Abercrombie & Fitch:**
* Shares surged as much as 17%, the most intraday since March 2020.
* Boosted its full-year earnings forecast, citing strong demand for its casual apparel.
* Now expects annual revenue to be $4.51 billion to $4.56 billion, up from a prior range of $4.43 billion to $4.48 billion.
* Comparable sales are projected to rise 2% to 4%, compared with a previous forecast of flat to up 2%.
* Net income is expected to be $1.14 to $1.20 per share, higher than the $0.93 to $1.03 per share previously anticipated.
* Gross margin is projected to be 58% to 59%, compared with the 57% to 58% range forecast earlier.
* Inventory levels are under control, with a 20% decrease in units on hand compared to last year.
Abercrombie & Fitch CEO Fran Horowitz attributed the positive results to the company’s focus on its core customer base of teens and young adults, as well as its efforts to enhance the customer experience both in stores and online.
**American Eagle Outfitters:**
* Shares climbed more than 10% after the company raised its full-year guidance.
* Expects annual revenue to be $4.45 billion to $4.55 billion, up from $4.34 billion to $4.44 billion previously.
* Comparable sales are projected to rise 2% to 4%, compared with a previous forecast of flat to up 2%.
* Net income is expected to be $0.75 to $0.85 per share, higher than the $0.65 to $0.75 per share previously anticipated.
* Gross margin is projected to be 36% to 37%, compared with the 35% to 36% range forecast earlier.
American Eagle CEO Jay Schottenstein said the company’s performance reflects the strength of its brands, particularly Aerie, which continues to resonate with customers.
Both Abercrombie & Fitch and American Eagle Outfitters have been navigating the challenging retail environment by focusing on product innovation, enhancing the customer experience, and managing inventory levels effectively. Their positive outlooks suggest that they are well-positioned to continue growing in the face of economic headwinds..
