The Abercrombie & Fitch retailer at South Park mall in Charlotte, North Carolina.
Chris Keane | Reuters
Abercrombie & Fitch shares tumbled round 10% Thursday after the attire retailer reported disappointing gross sales as extra teenagers are delaying back-to-school clothes purchases.
The corporate, which additionally owns Hollister, cautioned it continues to expertise delivery delays and stock constraints resulting from manufacturing services being quickly shutdown abroad. And within the short-term, that may weigh on outcomes.
“Proper now, it is robust on the market. All of the articles you learn are actual,” Chief Monetary Officer Scott Lipesky informed analysts on an earnings convention name. “And people of us on this aspect of the fence live by way of it daily.”
Abercrombie is managing by way of cargo delays of 1 to a few weeks, on common, by pulling ahead deliveries as a lot as potential and leveraging air freight the place obligatory, Lipesky mentioned. Nonetheless, he expects these steps will result in larger prices within the again half of the 12 months.
The retailer is hoping that manufacturing services in Southern Vietnam, which have been on prolonged closure as a result of Covid pandemic, will open by subsequent month or by early within the fourth quarter.
“But it surely’s out of our management at this level,” Lipesky mentioned.
For the three-month interval ended July 31, web earnings rose to $108.5 million, or $1.69 per share, from $5.46 million, or 9 cents a share, a 12 months earlier. Excluding one-time objects, Abercrombie earned $1.70 per share, topping estimates for 77 cents, primarily based on a survey of analysts by Refinitiv.
Web gross sales grew 24% to $864.9 million from $698.3 million a 12 months earlier. That was wanting expectations for $879 million.
The corporate mentioned gross sales at its Hollister, Gilly Hicks and Social Vacationer manufacturers rose 20% 12 months over 12 months, whereas they have been up 30% at Abercrombie.
In contrast with 2019 and pre-pandemic ranges, the corporate mentioned its fiscal second-quarter income was up about 3%. In the USA, Abercrombie’s largest market, web gross sales grew 31% on a one-year and 11% on a two-year foundation.
For its fiscal third quarter, Abercrombie is now calling for web gross sales to be up 2% to 4% from 2019 ranges of roughly $863 million.
Web gross sales in fiscal 2021 are forecast to be up low-to-mid single digits from the $3.6 billion Abercrombie achieved in 2019.
Chief Govt Fran Horowitz informed CNBC in a telephone interview that, to date, the retailer is seeing a slow-moving back-to-school season, with many customers nonetheless holding off on main clothes hauls.
In previous seasons, she mentioned, the retailer has tracked a spending sample of “peaks and valleys,” with gross sales surging earlier than a falloff within the fall. However this 12 months, extra teenagers seem like readjusting to socializing and spending time on trip earlier than heading again to the mall.
“It is an elongated season,” Horowitz mentioned. “At this time limit, [consumers] are nonetheless shopping for shorts and tees and even swim, though they don’t seem to be carrying that again to high school.”
“The mindset will shift within the subsequent couple of weeks … as we go by way of Labor Day weekend and the New York space heads again to high school for the primary time in two years,” she mentioned.
Regardless of Thursday’s selloff, Abercrombie shares are up greater than 70% 12 months to this point, bringing its market cap to $2.1 billion.