US retailer Abercrombie & Fitch's net sales soar 20% in Q3 FY23

The company reported net sales of $1.1 billion, marking a substantial 20 per cent increase on a reported basis and a 19 per cent rise on a constant currency basis compared to the same period last year. This impressive growth is further highlighted by a total company comparable sales increase of 16 per cent.

Abercrombie & Fitch Co's gross profit rate also saw a remarkable rise, reaching 64.9 per cent, which is approximately 570 basis points higher than the previous year. This increase in gross profit rate reflects the company's effective pricing and inventory management strategies, the company said in its Q3 FY23 results.

Operating expenses, excluding other operating loss, net, increased by $42 million or 8 per cent compared to the previous year. Despite this increase, operating expense as a percentage of sales showed a significant improvement, decreasing to 51.7 per cent from 57.3 per cent last year.

The company's operating income demonstrated remarkable growth, standing at $138 million on a reported basis. This compares favourably to the operating income of $18 million and $21 million last year on a reported and adjusted non-GAAP basis, respectively.

Net income per diluted share was reported at $1.83 on a reported basis, a stark contrast to the net loss per diluted share of $0.04 and a net income per diluted share of $0.01 last year on a reported and adjusted non-GAAP basis, respectively.

“Our strong third quarter results, with net sales and operating margin well-exceeding our expectations, speak to the power of our playbook working globally across our brand portfolio. Net sales growth of 20 per cent accelerated from the second quarter and was once again led by Abercrombie brands with exceptional growth of 30 per cent,” said Fran Horowitz, chief executive officer.

Looking ahead to the full fiscal 2023, Abercrombie & Fitch Co has updated its outlook, now expecting net sales growth of 12 per cent to 14 per cent from $3.7 billion in FY22, which marks an increase from the previous forecast of around 10 per cent. The operating margin is anticipated to be around 10 per cent.

For the fourth quarter of fiscal 2023, the company projects net sales growth to be in the low double-digits compared to Q4 FY22 level of $1.2 billion. The operating margin for Q4 FY23 is expected to range between 12 per cent and 14 per cent, compared to an adjusted operating margin of 7.7 per cent in Q4 FY22.

Fibre2Fashion News Desk (DP)