Abercrombie & Fitch reports Q1 loss, lowers outlook

For its first quarter, Abercrombie & Fitch Co. reported net sales of 813 million dollars, up 4 percent compared to last year.

Gross profit rate of 55.3 percent, was down approximately 810 basis points. Operating loss was 10 million dollars and 6 million dollars on a reported and adjusted non-GAAP basis, respectively.

The company’s net loss per diluted share was 32 cents and 27 cents on a reported and adjusted non-GAAP basis, respectively, compared to net income per diluted share last year of 64 cents and 67 cents on a reported and adjusted non-GAAP basis, respectively.

Commenting on the first quarter trading, Fran Horowitz, the company’s chief executive officer, said: “Results were driven by ongoing strength at the Abercrombie & Fitch brand, where global sales were above plan. Net sales at Hollister were in line with expectations. By region, the U.S. continued to outperform, EMEA net sales returned to positive territory, and APAC was impacted by Covid lockdowns in China.”

For fiscal 2022, the company now expects net sales to be flat to up 2 percent from 3.7 billion dollars in 2021, down from previous outlook of up 2 to 4 percent driven by a combined 200 basis point adverse impact from foreign currency and an assumed inflationary impact on consumer demand, partially offset by higher-than-expected sales in Q1.

Operating margin in the range of 5 to 6 percent, down from previous outlook of 7 to 8 percent reflecting a combined 200 basis point adverse impact from higher freight and raw material costs, foreign currency, and lower sales due to an assumed inflationary impact on consumers.

For the second quarter of fiscal 2022, the company expects net sales to be down low-single-digits to fiscal second quarter 2021 level of 865 million dollars, reflecting a combined, estimated adverse impact of approximately 300 basis points from foreign currency and Covid-related lockdowns in China and approximately 300 basis points due to an assumed impact of inflationary impact on consumer demand.

Operating margin in the range of 3 to 4 percent with the year-over-year decline driven by higher freight and raw material costs.