Abercrombie & Fitch shares climbed higher after the retailer assuaged recent concerns about its full-year outlook, raising its profit estimate for the period after strong holiday sales..
Following the market open, Abercrombie shares were up over 21% to trade at $31.53, their highest level since last March. The gains come after the company raised its full-year net sales guidance to a range of $3.53 billion to $3.59 billion, up from a previous estimate of $3.48 billion to $3.54 billion..
Additionally, Abercrombie lifted its adjusted diluted earnings per share outlook to a range of $3.60 to $3.70, compared to a prior forecast of $3.45 to $3.60. The company attributed the upward revisions to strong holiday sales and better-than-expected gross margin performance..
Despite the positive outlook, Abercrombie shares have faced headwinds in recent months due to concerns about slowing demand and rising costs. These concerns were exacerbated by the company’s disappointing third-quarter results, which missed analyst expectations and prompted a downgrade from Jefferies..
However, the latest guidance from Abercrombie suggests that the company is executing well and navigating the challenging retail landscape. The company cited strength in its digital business and the success of its loyalty program as key drivers of its improved outlook..
Abercrombie also noted that it had reduced its inventory levels by 10% at the end of the third quarter compared to the same period last year. This reduction, combined with the improved sales performance, helped the company achieve a gross margin of 59% for the holiday period, above its previous guidance of 57% to 58%..
Analysts remained positive on Abercrombie following the earnings report. Wells Fargo maintained its overweight rating on the stock, citing the company’s strong holiday performance and its ability to gain market share..
Piper Sandler also maintained its overweight rating, saying that Abercrombie’s revised guidance reflects the momentum the company has built and its ability to execute in a challenging environment..
Overall, the positive outlook from Abercrombie has boosted investor confidence and sent its shares higher. The company’s ability to navigate the challenging retail landscape and execute on its strategic initiatives positions it well for continued growth in the future..
