Abercrombie & Fitch Co on Tuesday raised its annual net sales growth forecast, signaling strong demand for its lifestyle brands heading into the crucial holiday shopping season.
Updated inventories and trendy logoless basics and jackets have allowed the company to rein in promotions and markdowns from a year earlier, when it was dealing with softer consumer demand.
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This reflected in an 11% rise in net sales at its Hollister brands, targeted at teen customers, as the company logged a strong back-to-school season, echoing results from footwear retailers Hibbet and Dick’s Sporting Goods.
“The retailer’s expansion into new categories like occasion wear and athleisure is helping it capture more spending and stay relevant,” said Rachel Wolff, senior analyst at Insider Intelligence.
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Demand for the company’s “on-trend” selection should insulate Abercrombie from a broader decline in discretionary spending, she added.
Still, the company’s shares, which have climbed 220% so far this year, were down about 5% in premarket trading.
Abercrombie expects holiday-quarter net sales growth to be up in the low double-digits, compared with analysts’ average estimate of a growth of 11.6%, as per LSEG data.
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Net sales at Abercrombie namesake brand soared 30% in the quarter ended Oct. 28.
The company’s net sales for the third-quarter jumped 20% to $1.01 billion, topping market expectations of $980.9 million.
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Abercrombie now expects net sales to rise between 12% and 14% for fiscal 2023, compared with its earlier forecast of about 10% growth.