Why Lifestyle Retailer Abercrombie & Fitch Shares Are Sliding Today

Abercrombie & Fitch Co ANF reported third-quarter FY23 sales growth of 20% year-on-year to $1.06 billion, missing the analyst consensus estimate of $1.34 billion. Total company comparable sales rose 16%.

Adjusted EPS of $1.83 beat the consensus estimate of $1.18.

Americas sales increased 22% Y/Y, EMEA grew 14% and APAC sales climbed 13%. Abercrombie brand sales rose 30%, while Hollister sales climbed 11%.

Gross profit margin expanded 570 basis points to 64.9%. Operating income for the quarter was $138 million versus 18 million a year ago, with a margin of 13.1%.

The company held $649.5 million in cash and equivalents as of October 28, 2023. The operating cash flow for the quarter was $350 million.

Inventories decreased 20% to $595 million at the end of Q3.

Outlook: Abercrombie & Fitch sees FY23 net sales growth of 12% - 14% (previously 10% growth).

ANF sees FY23 operating margin of about 10% (previously 8% - 9%). Capital expenditure of about $160 million.

For Q4, ANF sees sales growth to be up low double-digits compared to 2022 level of $1.2 billion and sees an operating margin of 12% - 14%.

Price Action: ANF shares are trading lower by 4.12% at $69.31 on the last check Tuesday.

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