Abercrombie & Fitch raises annual profit forecast on Hollister power; shares jump

Abercrombie & Fitch raised its annual profit forecast on Tuesday, betting on sturdy demand for its Hollister clothes and jackets as buyers snap up in-trend attire throughout the essential vacation season.

The firm’s shares surged almost 18%, after it additionally forecast a robust vacation quarter and beat third-quarter estimates.

The clothes retailer, whose denim denims promote for $100 on common, has benefited from a robust on-line presence and resilient spending amongst prosperous customers regardless of tariff-driven uncertainties.

“The company’s success is being driven by a sharp merchandising strategy and a consumer-centric focus, which have enabled it to maximize full-price sales and deepen customer engagement,” mentioned Rachel Wolff, analyst with Emarketer.

Its Hollister model posted a 15% like-for-like gross sales development within the third quarter, helped by the onset of the autumn season and robust efficiency throughout back-to-school gross sales. Hollister contributes to greater than half of the corporate’s whole gross sales.

“Like Gap and Levi Strauss, Abercrombie is benefiting from the denim boom — and is likely to continue doing so as shoppers focus their dollars on retailers that can offer them a compelling mix of style and affordability,” Wolff mentioned.

Abercrombie’s partnerships with international manufacturers akin to Crocs and the NFL have additionally boosted its reputation.

Its Cyber Monday collaboration with Taco Bell is anticipated to herald extra buyers to its shops, executives mentioned on the post-earnings name.
For the fourth quarter, the retailer forecast gross sales to develop between 4% and 6% and profit within the vary of $3.40 to $3.70 per share.

The firm expects per-share web earnings for fiscal 2025 to be between $10.20 and $10.50, the midpoint of which is larger than its earlier vary of $10.00 to $10.50.

Rival Gap additionally beat quarterly comparable gross sales and profit estimates final week.

Abercrombie’s web gross sales rose 7% to $1.29 billion for the quarter ended November 1, in contrast with the $1.28 billion estimate, in response to knowledge compiled by LSEG.

Adjusted profit of $2.36 per share additionally topped expectations of $2.16.