Abercrombie & FitchThe history of growth begins to slow down.
Clothing seller shares fell on Wednesday by 15% after the company was released Weaker than expected tips In the current quarter and fiscal quarter of 2025 and said that he expected his sales to grow slower than Wall Street expected.
According to LSEG, Abercrombie expects sales between 3% to 5% in the 2025 tax year, far below estimates by 6.8% growth. In the current quarter, the company predicts that the profit per share will be from $ 1.25 to USD 1.45, which is not expected of USD 1.97.
The slowdown of the Abercrombie namesake brand is fears. This segment conducted the company's development in previous quarters more than Hollister, its chain, which is intended for teenagers.
In the quarter, sales in Abercrombie increased only 2%, and the sale of Hollister increased by 16%. Compoundable sales in Abercrombie increased by 5%, and Hollister Comps increased by 24%.
The sales of the Abercrombie brand still released until February and became negative within a month, said the general director of Fran Horowitz in an interview with analysts.
“Last year we had a small transition in spring, and this year it is a bit more normalized. (Full sales of the company are positive in February, seeing some difference between the brands. Hollister was very strong from a very strong quarter, and Abercrombie is a bit negative, “said Horowitz.
When asked where they drive macroeconomic conditions or something else.
In addition to tips and slowing down, Abercrombie narrowly overcame Wall Street expectations in the fourth tax quarter. Here's how the seller acted in comparison with what Wall Street predicted, based on an analytics survey conducted by LSEG:
- Profit per share: USD 3.57 compared to USD 3.54
- Income: $ 1.58 billion compared to $ 1.57 billion expected
The company reported net income over three months, which ended on February 1, amounted to USD 187 million, i.e. USD 3.57 per share, compared to USD 158 million, i.e. USD 2.97 USD per share, a year earlier.
Sales increased to USD 1.58 billion, which is an increase of 9% from USD 1.45 billion a year earlier. Like other retailers, Abercrombie took advantage of the additional week of sales during the last year. This negatively distorted the comparisons of many companies, but the sale of Abercrombie jumped even with one week of sales.
In addition to sales and earnings, Abercrombie said that he expected another key record – the operational margin – will be lower than Wall Street expected in the current quarter. According to Streetaccount, Abercrombie expects his operational margin in the range of 8%to 9%, significantly for 12.8%estimates.
In January he offered Abercrombie Investors eye In his holiday performance, when he issued an early set of results and raised his perspectives in the fourth quarter. Despite this, his reserves fell that day because the forecast showed that Abercrombie expected his growth to be moderate and thinks that his operational margin would not increase beyond the previous forecast. The concerns about his operational margin probably grow after Abercrombie issued his fiscal guide in the first quarter.
However, not all Abercrombie tips were a disappointment. According to LSEG in the current quarter, sales will increase between 4%to 6%, as expected by 5.8%. Throughout the year, he expects that earnings will be from USD 10.40 to 11.40 USD per share, which at a distance from half to high -class is higher than the expectations of USD 10.83 per share.
After about two years of explosive shares and sales, Abercrombie seems to be equal, and markets can turn away from the largest retail star in favor of names with a more direct growth.
The company is still growing and is working on building its international market, but it is not clear whether the hit numbers, which he issued after the implementation of the implementation under the rule of the general director Horowitz. He faces difficult comparisons from the previous year, and some of the noise from the change may begin to disappear.
In addition, consumers have been noticeably cautious since the beginning of the year, which will always exert emphasize specialist sellers of sellers who sell discretionary goods, such as clothes. Geopolitics, unjustly cool weather and mass tragedies, such as fires in Los Angeles, suppressed consumers' demand, but the buyers are also concerned about such things as raising prices from tariffs. In February, consumer trust fell to the lowest level from 2021.
The fact that Hollister is growing faster than Abercrombie and takes into account most of the sales now means a turning point for the company and indicates that the brand focused on teenagers can be a more important growth driver. He also exerts pressure on management to make more to stimulate the Abercrombie brand and make sure that it does not become stagnation.
The beginning of the year was slightly worse than expected for many other companies, including Objective AND Elf Beauty. Like the Elf, Abercrombie could observe the impact of the proposed ban on Tiktok, which at the beginning of the year pulled the results of a cosmetics company.
Both companies largely rely on the marketing thicket. In February CEO of Elf Tarang Amin told CNBC that he suspected the proposed prohibition Impact on the sale of cosmetics Because people did not publish such things as movies “get ready with me” or taking clothes that can increase sales.
In a press release in January, Horowitz signaled that Abercrombie would be more focused on increasing profits than sales, because it seems to “increase the long -term value of shareholders.”
“After the expected two years of two-digit upper and lower growth, I am as sure as always in terms of the strength of our brands and the operational model, when we go forward, supported by the unique possibilities we have built,” said Horowitz. “In 2025, we will try to continue the balanced, profitable growth through the implementation of our textbooks to win and stop customers around the world. Our goal is to use our healthy margin and balance structure to increase the dollars of operational income and profits per share faster than sales. ”
This suggestion came true on Wednesday, when Abercrombie announced a new authorization of the redemption of shares worth $ 1.3 billion and stated that he was expecting to spend $ 400 million on the purchase of shares in 2025.