US' Abercrombie & Fitch posts sales of $805 mn in Q2 FY22

“As the global macro environment deteriorated in the second quarter, we experienced a divergence in brand performance. Abercrombie delivered its highest Q2 sales since 2015 and its ninth consecutive quarter of average unit retail ("AUR") growth. This was more than offset by Hollister, where we saw a greater than anticipated impact from inflation and a shift away from core categories to more fashion-driven products, contributing to lower-than-expected conversion and basket size. We expect macro headwinds to persist and have taken action to adjust receipts across brands to fuel winning categories for late fall and holiday. In addition, we have right-sized the Hollister inventory receipt plan for holiday and beyond. Looking ahead, we will continue to monitor sales volumes and react with agility to ensure inventory turns appropriately, and we expect year-over-year inventory growth to have peaked in Q2 and to moderate significantly in the back half as we lap late receipts from last year,” Fran Horowitz, chief executive officer, said.

“Thus far in August, we have experienced a steady improvement in weekly sales trend, although total quarter-to-date remains in line with Q2. Our revised outlook reflects the uncertain environment for the back half. As we have successfully done over the last several years, we will continue to navigate near-term challenges and reduce spend where appropriate while executing our long-term goals. We remain confident that we have the balance sheet and strategies in place to drive continued progress towards our 2025 Always Forward Plan introduced at our June 2022 Investor Day,” explained Horowitz.

For fiscal 2022, the company expects net sales to be down mid-single-digits from $3.7 billion in 2021 compared to previous outlook of flat to up 2 per cent, driven by an assumed ongoing inflationary impact on consumer demand. The outlook also includes an estimated adverse impact of approximately 200 basis points from foreign currency. The company forecasts operating margin in the range of 1 to 3 per cent, down from previous outlook of 5 to 6 per cent primarily reflecting lower sales due to an assumption of lower AURs needed to keep inventory current. Mitigating these factors will be actions to reduce certain expenses, and adjust inventory receipt levels and cadence by region in response to current market forces.

Fibre2Fashion News Desk (RR)