📈Abercrombie & Fitch Co. (NYSE: ANF) once again impresses with outstanding results in the second quarter of fiscal year 2024, posting record net sales of $1.1 billion, an impressive increase of 21% compared to the previous year. Comparable sales growth also did not lag behind, achieving 18%.
🌍 The growth was broad, encompassing all regions and brands, with the Abercrombie line up by 26% and Hollister gaining traction with an increase of 17%. This robust performance reflects the strong appeal of the brands and the effectiveness of the company’s strategies.
💼 Operating margin saw a significant expansion, reaching 15.5%, with a record operating income of $176 million. The company also strengthened its financial position by redeeming all of its 8.75% senior secured notes and amending and extending the Secured Revolving Credit Facility (ABL Facility), ensuring liquidity of $1.2 billion.
🔝 Abercrombie is now raising its full-year outlook, expecting a 12% to 13% increase in net sales and an operating margin in the range of 14% to 15%.
🗣️ CEO Fran Horowitz expressed confidence in the company’s trajectory, citing exceptional execution from the team, comprehensive growth, and enhanced profitability. “Despite an increasingly uncertain environment, we remain committed to executing our global playbook and maintaining discipline over inventory and expenses,” said Horowitz.
🔍 The adjusted earnings reveal a diluted earnings per share of $2.50, surpassing the expectations of $2.22 according to FactSet. Consistent growth across all fronts suggests a reinforced confidence in the company’s long-term strategies focused on marketing, digital, technology, and store expansion.
💡 Investment Outlook:
Despite a slight slowdown in margin growth, the combination of robust sales growth, improved profitability, and a strong financial position reinforces my investment thesis for Abercrombie & Fitch (ANF) as “Buy”. The company has shown resilience and adaptability in the face of challenges, promising a path of sustainable and profitable growth ahead.📊
Untill next time,
Santiago
