ANF Stock Soars 20% as Retail Continues to Roar

Highlights

• Abercrombie & Fitch reported better-than-expected Q1 results.
• The retailer posted a profit on expectations for a quarterly loss.
• Investors celebrated, sending the stock soaring by 20% to $28 per share.

Retail stocks are showing off, including Abercrombie & Fitch. ANF stock has soared over 20% in response to the company’s better-than-expected Q1 results. Abercrombie surprised investors with a profit of $16.5 million, or $0.32 per share compared, compared with estimates for a quarterly loss. 

Excluding items, Abercrombie reported EPS of $0.39 vs. estimates for a loss of ($0.05). Revenue also topped expectations, coming in at $836 million compared with estimates of $815 million. Same-store sales inched higher by 3% while Wall Street was bracing for a 1% decline. 

The results were impressive considering the uncertainty that consumers are facing. Inflation remains elevated and despite the banking crisis, the Fed may not be done raising rates just yet. Nevertheless, consumers continue to demonstrate resilience, taking out their wallets to spend at retailers and restaurants.

Investors liked what they saw, sending the stock higher by 20% to over $28 per share. The last time that ANF stock traded at this level was in early April. 

Improved Outlook

Abercrombie & Fitch is off to a running start in 2023 so management decided to lift the retailer’s outlook. The company now pegs fiscal 2023 net sales growth at 2%-4%, outpacing a previous outlook on the high side of 1%-3%.

While Kohl’s also reported better-than-expected Q1 results, the retailer decided to stick with its Q1 guidance for now.

Despite the economic headwinds, Abercrombie says it is positioned to “chase demand” with its brands. The retailer’s own label saw a 14% jump in sales but sales in the Hollister brand, which appeals to younger generations, fell by 7%.

Abercrombie has been striking the right balance with its inventory and attracting customers to its brand for items like dresses as the workforce returns to the office.