Abercrombie & Fitch bought off to begin on recouping final yr’s $114 million loss this previous quarter.
Building off the momentum it constructed up within the latter half of 2020, the specialty retailer noticed first-quarter working revenue climb to its highest stage since 2008.
“In the first quarter, the U.S. benefited from government stimulus, a mini back-to-school season and easing of Covid restrictions,” CEO Fran Horowitz stated Wednesday on a name with traders. “Internationally, there was the reopening of certain markets, although many large countries remained closed.”
Horowitz praised the efficiency of Abercrombie’s ladies’s class. “[It] had a breakout moment, the kind I have rarely seen in my 30-plus years as a merchant, achieving its best Q1 revenue since 2008 and the third largest Q1 in brand history,” she stated. This success, she famous, was “broad-based across categories.” Winners included denims, clothes, intimates and swim. In males’s, she highlighted denims, shorts and swim.
At Hollister, Horowitz stated standout gadgets this previous quarter included clothes and fleece tops amongst ladies and mushy and comfy merchandise like sweatpants for boys. Both, she stated, noticed “significant sales improvement” in denims.
Abercrombie & Fitch closed yet one more flagship retailer within the first quarter, constructing on an ongoing world retailer community optimization initiative that Horowitz described as one of many firm’s “top priorities.” The plan—which goals to maneuver the model away from tourist-dependent flagships in favor of smaller, omni-enabled shops—has seen the retailer shut 9 of its 15 flagship places because the starting of fiscal 2020.
“The line between stores and digital continues to blur,” chief monetary officer Scott Lipesky stated. “We believe that stores are a critical part of the omnichannel brand experience and remain committed to investing in smaller, omni-enabled locations that better serve our local customers. This includes restarting our store remodel program and delivering more off-mall formats in the future as we continue to meet our customers where they shop.”
To this finish, the corporate has additionally been constructing out its social media outreach. “The power of social selling is clearly a key theme for us, and one that we are actively leaning into across brands,” Horowitz stated. The firm’s embrace of social media and influencers culminated this month with the launch of Social Tourist, a Hollister model created in partnership with Charli and Dixie D’Amelio—TikTookay’s No. 1 and No. 9 most-followed accounts, respectively.
“As our customers continue to shift to digital shopping and exploration across social channels, it made sense to introduce a brand inspired by that world,” Horowitz stated.
In a departure from the corporate’s different manufacturers, she famous, nearly all of Social Tourist’s product will dwell on-line, with choose SKUs accessible in Hollister shops. It will launch gadgets in limited-edition, month-to-month drops designed “to create excitement and buzz and to sell out,” Horowitz stated.
According to the CEO, Social Tourist has generated greater than 85 million estimated impressions, together with greater than 25 million views of the model video. The new label will obtain additional publicity on Hulu’s “The D’Amelio Show,” an upcoming actuality present that the streaming service introduced simply final week.
“We’re extremely excited about the long-term opportunity and view the brand as another growth vehicle,” Horowitz stated. “We also believe it will provide a halo for Hollister, offer insights into up-and-coming, teen-oriented trends and help form other social strategies.”
Cash and money equivalents totaled $0.9 billion as of May 1, up from $0.7 billion a yr earlier, however down from the $1.1 billion as of Jan. 30. Inventories declined 9 p.c to $389 million.
Net Sales: Abercrombie & Fitch recorded web gross sales of $781 million within the first quarter ended May 1, a 61 p.c improve versus the prior-year interval. Compared to 2 years in the past, web gross sales rose 6 p.c.
Digital gross sales climbed 45 p.c year-over-year to $403 million. The improve drove the channel to 52 p.c of complete gross sales.
By model, Hollister and Abercrombie noticed related charges of enchancment, with the previous up 62 p.c to $442 million and the latter up 60 p.c to $339 million. The United States, the place gross sales jumped 72 p.c to $554 million, led the corporate by area. Meanwhile, web gross sales rose 41 p.c in Europe, the Middle East and Africa; 42 p.c within the Asia-Pacific; and 29 p.c within the remaining worldwide areas.
Earnings: Abercrombie & Fitch continued posting a few of its finest working revenue numbers in years within the first quarter. The firm pulled in an revenue of $57 million and $60 million on a reported and adjusted non-GAAP foundation, respectively, a marked enchancment from the prior-year interval’s working lack of $209 million and $168 million—once more on a reported and adjusted non-GAAP foundation, respectively.
Per diluted share, web revenue totaled $0.64 on a reported foundation, versus a web lack of $3.90 a yr in the past. On an adjusted non-GAAP foundation, Abercrombie & Fitch recorded web revenue per diluted share of $0.67, in comparison with lack of $3.29 within the prior-year interval.
According to Lipesky, Abercrombie & Fitch expects second-quarter web gross sales to land at or above the place they have been in 2019—$841 million. This projection, he famous, consists of the expectations that government-mandated retailer closures is not going to improve from present ranges and that the corporate “will continue to successfully manage” ongoing provide chain constraints and labor shortages.
Lipesky didn’t provide any outlook for the total yr, however famous that the corporate is “planning to make progress recouping Covid-driven sales losses.”
CEO’s Take: “As we think about Q2, we expect to realize benefits from the further lifting of Covid restrictions and, hopefully, a reopening of key countries in Western Europe,” Horowitz stated. “Thus far, our momentum has continued quarter-to-date. As more countries and states begin to open, we look forward to further engaging with our global customer base and are cautiously optimistic that we will see a more normal back-to-school, back-to-fall period compared to last year. And while we hope it all goes smoothly, we’re not walking away from this past year’s key learnings and discipline. We will continue to expect the unexpected and we’ll quickly pivot, no matter what may come our way.”