Abercrombie Soars 16% on Q3 Beat… Powered by Hollister’s Sales Jump Heading Into Thanksgiving

Abercrombie & Fitch shares jumped 16% Tuesday morning after the retailer posted results that beat Wall Street’s expectations and showed that Hollister is still pulling more than its weight heading into the holidays.

Before the market even opened, the stock was already up double digits as investors reacted to the company’s third-quarter update. Abercrombie brought in $1.29 billion in revenue (slightly higher than the $1.28 billion analysts expected) and earnings of $2.36 per share, well above the $2.16 forecast. Even though total profit slipped to $113 million from $132 million last year, the overall sales growth and steady improvement in key areas were enough to catapult shares higher.

From there, things split in two directions. The Abercrombie brand had a softer quarter, with sales down 2% to $617 million and a 7% drop at stores that have been open a while. CEO Fran Horowitz had warned this might happen because they were clearing out old inventory, but she still expected the brand to bounce back by late 2024. Now the company says holiday sales will probably be flat, which is definitely slower than they were hoping for.

Hollister, meanwhile, kept right on climbing. The brand posted a strong 16% jump in sales, bringing in $673 million… easily topping predictions. Sales at established stores rose 15%. This is now the third quarter in a row that Hollister has been the clear growth driver for the company, and management expects that trend to carry through the busy holiday shopping period.

Looking ahead, Abercrombie expects fourth-quarter sales to grow 4% to 6%, which lines up pretty closely with Wall Street’s estimates. The company also expects earnings between $3.40 and $3.70 per share… again, right in the range analysts were looking for.

But beyond the numbers, what many investors care about is the bigger picture. Over the past several years, Abercrombie has staged one of retail’s more impressive comebacks. Under Fran Horowitz, the company has revamped nearly everything… from the look and feel of its clothes to the way teams inside the company work together. 

Instead of trying to chase every fashion trend, the company focused on consistency, quality, and giving Abercrombie and Hollister their own clearer identities. They also built a system that pays much closer attention to what shoppers actually want, using both data and real-world customer visits.

All of that work is paying off. Abercrombie is on track to pass $5 billion in annual sales for the first time ever. The company is also expanding into new areas like bridalwear, NFL partnerships, and selling Abercrombie Kids at Macy’s stores. Now it’s just a matter of seeing if they can carry this momentum into the holiday season.

At the time of publishing this article, Stocks.News doesn’t hold positions in companies mentioned in the article.