Abercrombie & Fitch shares climbed 20% after the apparel company announced improved 2019 sales projections, attributing the optimism to store renovations and the Hollister brand’s rising popularity among younger consumers.
FILE PHOTO: An Abercrombie & Fitch store is shown in La Jolla, California, U.S., May 17, 2017. REUTERS/Mike Blake
The firm plans to shutter 40 underperforming locations while overhauling outlets with better lighting, displays, and on-trend merchandise like jeans and sweatshirts to revitalize its Abercrombie brand. CEO Fran Horowitz emphasized that redesigned stores have demonstrated strong performance, with continued investment in physical retail spaces.
Analysts noted the Abercrombie brand faced declining sales as younger shoppers shifted toward fast-fashion and online retailers. Fourth-quarter same-store sales for Abercrombie dropped 2%, partly due to misaligned holiday apparel choices. In contrast, Hollister reported a 6% sales increase during the same period.
Industry expert Gabriela Santaniello of A line Partners said Abercrombie corrected its sizing issues, alleviating concerns about prolonged sales declines. The company is also expanding its loyalty program and leveraging social media influencers to promote products like its "Fierce" perfume through branded hashtags.
For the fourth quarter ended February 2, Abercrombie & Fitch reported a 3% rise in same-store sales, exceeding analyst expectations of 1.47%. Excluding one-time costs, the company earned $1.35 per share, surpassing the $1.15 forecast. It now projects 2019 net sales between $3.66 billion and $3.73 billion, above the $3.61 billion estimate.
