US retailer Abercrombie & Fitch expects net sales growth of 4-6% in Q4

“I am incredibly proud of how our global teams and partners have continued to execute in the face of ongoing COVID-related disruptions, putting us on track to achieve our highest annual operating income and margin in over a decade. Customers have embraced each brand's unique product, voice and experience. Strong response to our winter and holiday collections, including standout performance in jeans, dresses and sweaters, enabled us to maintain our planned promotional cadence, including reducing the depth of our promotions over the peak Black Friday/Cyber Monday period and throughout December," Fran Horowitz, chief executive officer, said.

The company forecasts gross profit rate for the fourth quarter of 2021 to be approximately flat to 2019 levels of 58.2 per cent, in line with previous outlook, reflecting double-digit AUR improvement relative to 2019 and 2020 on reduced depth and breadth of promotions and markdowns, offset by approximately $75 million of freight cost pressure, equating to roughly 650 basis points in gross profit rate, due to rising ocean and air rates and increased air deliveries related to Vietnam factory closures.

"After a strong start to the quarter in inventory receipts and product sell-through, we experienced unexpected inventory receipt slides in key categories due to extended port and transportation delays. As a result, we did not have enough inventory to keep pace with customer demand, resulting in lost sales during the peak holiday selling period. While all brands were impacted, Hollister and Gilly Hicks were slightly harder hit. We believe that, if we had the inventory on-hand, we would have delivered sales within our previous outlook range. Post-holiday, as inventory has landed, we have experienced an acceleration in sales trend. Looking ahead, we expect to minimize the gross margin impact of late deliveries by balancing promotional depth and utilizing pack-and-hold where appropriate," explained Horowitz.

For fiscal 2021, the company forecasts net sales up in the range of 19-20 per cent compared to 2020 net sales of $3.125 billion and up 2-3 per cent compared to 2019 net sales of $3.623 billion. The company hopes for operating margin of 9-10 per cent, in-line with previous outlook, compared with adjusted non-GAAP operating margins of 1.7 per cent and 2.3 per cent in fiscal 2020 and fiscal 2019, respectively.

"As I reflect on the past two years, we have implemented crucial, transformative changes to pivot our business model and strategically position our company and our brands for future growth. From reducing square footage by about 20 per cent compared to 2019, to increasing our digital business to roughly 50 per cent of our sales volume, to refining the purpose and positioning of each of our brands, we believe that our company has never been better positioned to increase shareholder value. I am excited for 2022 and beyond as we further strengthen our role as a leading global omni-channel retailer," Horowitz concluded.

Fibre2Fashion News Desk (RR)