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Abercrombie & Fitch Q4 net sales jump 15 percent

By Prachi Singh

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Business

Net sales for the fourth quarter at Abercrombie & Fitch Co. were 1.193 billion dollars, up 15 percent from last year, with comparable sales up 9 percent. The company said, additional week in fiscal 2017 and changes in foreign currency exchange rates benefited fourth quarter net sales by approximately 4 percent and 3 percent, respectively.

“We are pleased by our performance, delivering positive comparable sales for the fourth quarter across brands, channels and geographies and more than doubling our operating income. In 2018, we will continue to focus our attention and our investments on engaging our customers with compelling assortments and new experiences, in clearly defined brand voices, positioning our business for sustainable long-term growth,” said Fran Horowitz, the company’s Chief Executive Officer, in a statement.

Abercrombie & Fitch posts rise in net income

The company reported GAAP net income per diluted share of 1.05 dollars for the 14-week fourth quarter compared to 0.71 dollar for the 13-week fourth quarter, while adjusted non-GAAP net income per diluted share was 1.38 dollars for the quarter compared to 0.75 dollar last year. GAAP net income per diluted share was 0.10 dollar for the 53-week year compared to 0.06 dollar for the 52-week year ended January 28, 2017, while adjusted non-GAAP net income per diluted share was 0.65 dollar for the full year, compared to 0.06 dollar last year.

By brand, net sales increased 19 percent to 709.2 million dollars for Hollister and 9 percent to 484 million dollars for Abercrombie over last year. By geography, net sales increased 13 percent to 774.6 million dollars in the US and increased 20 percent to 418.6 million dollars in international markets from last year. Direct-to-consumer net sales grew to around 34 percent of total company net sales, compared to approximately 31 percent last year.

The gross profit rate was 58.4 percent, down 90 basis points from last year, driven by higher average unit cost and lower average unit retail. Net income attributable to Abercrombie & Fitch Co. was 74.2 million dollars compared to 48.8 million dollars last year, while adjusted non-GAAP net income attributable to the company was 97.2 million dollars compared to 50.9 million dollars last year.

Abercrombie & Fitch full year net sales grow 5 percent

Net sales for the full year were 3.493 billion dollars, up 5 percent on last year, with comparable sales up 3 percent. The additional week in fiscal 2017 and changes in foreign currency exchange rates each benefited full year net sales by approximately 1 percent.

By brand, net sales increased 11 percent to 2.039 billion dollars for Hollister and decreased 2 percent to 1.454 billion dollars for Abercrombie from last year. By geography, net sales increased 4 percent to 2.209 billion dollars in the US and increased 7 percent to 1.284 billion dollars in international markets from last year. Direct-to-consumer net sales grew to approximately 28 percent of total company net sales, compared to approximately 26 percent last year.

The gross profit rate was 59.7 percent, down 130 basis points, driven primarily by lower average unit retail. Net income attributable to Abercrombie & Fitch Co. was 7.1 million dollars compared to 4 million dollars last year. Excluding certain items, adjusted non-GAAP net income was 45 million dollars, compared to4.1 million dollars last year.

During the year, the company opened nine new stores, including six US and one international full-price stores and two outlet stores. The company also closed 39 stores, primarily in the US.

FY18 comparable sales expected to be up low-single digits

For fiscal 2018, the company expects net sales and comparable sales to be up low-single digits, with benefits from changes in foreign currency exchange rates largely offset by the adverse impact from the loss of fiscal 2017's additional week. Changes in foreign currency exchange rates are expected to benefit net sales by approximately 50 million dollars and operating income by approximately 15 million dollars. A gross profit rate is expected to be up slightly from the fiscal 2017 rate of 59.7 percent, with some continuing pressure in the first quarter.

The company plans to open 21 full-price stores in fiscal 2018, including 11 in the US and 10 in international markets. In addition, the company anticipates closing up to 60 stores in the US during the fiscal year through natural lease expirations.

On February 23, 2018, the company’s board of directors declared a quarterly cash dividend of 0.20 dollar per share on the Class A Common Stock of Abercrombie & Fitch Co., payable on March 19, 2018 to stockholders of record at the close of business on March 9, 2018.

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