In its most recent quarter, Abercrombie & Fitch (ANF) reported revenue of $842.41 million and GAAP EPS of -$0.06. The company delivered an earnings beat but missed on revenue. ANF was on fire prior to the earnings report, the stock had more than doubled compared to its share price a year earlier. However, sentiment may have changed. ANF is off by double digits since the report was released. I had the following takeaways on the quarter.
Is Hollister Showing Cracks?
The stalwart for Abercrombie & Fitch has been its Hollister brand, which has shown strong growth across all of the company’s sales channels. Retail and fashion can be fickle, but Hollister has had the hot hand in the past. Revenue from Hollister was up 12% Y/Y versus low single-digit growth from Abercrombie & Fitch. Hollister has been close to its customer base, which has allowed the brand to react to trends in real time. This quarter Hollister generated growth across sales channels and across genders, it was the highest second quarter sales volume in the brand’s history.
Understanding trends and not getting stuck with a season’s worth of unsold inventory is key in the retail space where trends can change quickly. Management expects to apply its customer focus perfected at Hollister with the Abercrombie & Fitch brand. Whether its success at Hollister can translate into increased sales for its house brand remains to be seen. Read more:
