Abercrombie Sales Beat Expectations After Big Inventory Rise

(Bloomberg) — Abercrombie & Fitch Co.’s sales beat analysts’ expectations for the sixth straight quarter, but that wasn’t enough to convince investors accustomed to the return of ’90s fashion.

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The company said comparable sales rose 18% in the second quarter, beating the 15% growth analysts had expected. The outperformance was driven by its Hollister chain, while sales at Abercrombie’s own-name stores were roughly in line with estimates. Gross margin was slightly below expectations.

Shares of Abercrombie Inc. were down 11% at 8:30 a.m. in early trading in New York. Expectations were high ahead of the results as the stock has nearly doubled this year through Tuesday’s close, the best performer among 15 companies in the S&P Composite 1500 Apparel Retail Index. That’s on top of a nearly 300% jump in shares in 2023.

“Abercrombie holds itself to higher standards than most retailers,” Vital Knowledge analyst Adam Crisafulli wrote in a note to clients, so “people are likely to be somewhat dissatisfied” with these results.

Once known for its perfume-scented stores and topless mannequins, the New Albany, Ohio-based company has been courting Gen Z and millennials with its denim offerings, bridal shop and weekly releases of new items. Sales at Abercrombie have continued to grow rapidly in recent quarters even as budget-conscious shoppers have reined in spending on other discretionary purchases.

In a statement Wednesday, Chief Executive Fran Horowitz highlighted the “increasingly uncertain environment” facing retailers. However, the company raised its full-year sales outlook.

(Update stocks in third paragraph, add analyst comment in fourth paragraph)

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