US' Abercrombie & Fitch's sales up 14% YoY to $1.2 bn in Q3 FY24

The gross profit as a percentage of net sales improved to 65.1 per cent, up from 64.9 per cent, driven by better cost management. Operating income of the company rose to $179.3 million (14.8 per cent of net sales) from $138.0 million (13.1 per cent) in Q3 FY23, reflecting strong operational efficiency, Abercrombie & Fitch said in a press statement.

The net income attributable to A&F increased to $132.0 million, or $2.50 diluted earnings per share (EPS), compared to $96.2 million, or $1.83 per diluted share, in FY23. The operating expense, excluding other operating (income) loss, net, increased to $609 million as compared to $546 million in Q3 of last fiscal. The operating expense, excluding other operating (income) loss, net, as a per cent of sales improved to 50.4 per cent from 51.7 per cent in FY23.

“For the sixth consecutive quarter, our global team delivered double-digit net sales growth. This great sales performance led to better-than-expected results on both the top and bottom lines. With broad-based growth across regions and brands, we continue to execute at a high level, leveraging our regional playbooks and operating model. Each of our regions grew double digits in the quarter, with the Americas growing 14 per cent, EMEA growing 15 per cent and APAC growing 32 per cent,” said Fran Horowitz, chief executive officer (CEO) of Abercrombie & Fitch Co.

“From a brand perspective, each brand showed growth-on-growth as customers responded positively to our product and marketing. Abercrombie brands delivered 11 per cent comparable sales on top of 26 per cent last year and Hollister comped 21 per cent on top of 7 per cent last year. The strong top-line growth drove third quarter operating income of $179 million, up 30 per cent to 2023,” added Horowitz.

Nine-month (9M) 2024 financials

The company reported net sales of $3.36 billion for the 9M period, a 19 per cent increase compared to $2.83 billion for the same period in FY23. Gross profit improved significantly to $2.2 billion, representing 65.4 per cent of net sales, up from 62.9 per cent in FY23, primarily due to lower costs of sales, the US based company said.

The operating income surged to $484.8 million (14.4 per cent of net sales), compared to $261.9 million (9.3 per cent) in the prior fiscal, reflecting strong operational efficiency. Stores and distribution expenses, as a percentage of net sales, decreased to 35.1 per cent from 37.9 per cent in FY23, while marketing, general, and administrative expenses increased slightly to 16.0 per cent from 15.9 per cent.

Net income attributable to A&F grew substantially to $379.0 million (11.3 per cent of net sales), compared to $169.7 million (6.0 per cent) in FY23. Basic EPS rose to $7.43 from $3.38, while diluted EPS increased to $7.13 from $3.25 in FY23. The significant growth was supported by reduced interest expenses and higher interest income, contributing to an increase in income before income taxes to $503.7 million from $256.7 million in last fiscal.

Full-year fiscal 2024 outlook

Abercrombie & Fitch has revised its full-year guidance for fiscal 2024. The company now expects net sales growth in the range of 14 per cent to 15 per cent, an increase from the previously projected 12 per cent to 13 per cent. Operating margin is forecast to be around 15 per cent, compared to the earlier range of 14 per cent to 15 per cent. The effective tax rate is expected to remain in the mid-20s, and capital expenditures are estimated at approximately $170 million, in line with previous guidance.

Fourth quarter (Q4) fiscal 2024 outlook

For the fourth quarter, the company forecasts net sales growth in the range of 5 per cent to 7 per cent, with an operating margin of around 16 per cent. The effective tax rate for the quarter is expected to be in the high-20s.

Fibre2Fashion News Desk (SG)