Abercrombie & Fitch stock surges on Hollister sales
Abercrombie & Fitch’s business has stabilized with some big help from one of its most popular brands, Hollister.
The company’s Hollister stores recorded strong sales for its second quarter ended July 29, allowing it to continue its momentum. And the retailer said its Abercrombie brand benefited from a mix of products that proved to be more appealing to customers.
The results provided hope that the mall fashion chain is reconnecting with shoppers despite the retail sector’s woes. The encouraging development comes after the chain announced in early July that it had ended talks with potential buyers and would pursue a sustainable path on its own.
Sales at stores open at least a year fell 1%, beating S&P Global Market Intelligence estimates of a 2.2% decline.
Investors cheered. Abercrom- bie’s stock rose more than 17% Thursday, closing at $11.25 per share, up $1.64.
To be sure, the retailer’s Abercrombie brand continues to struggle overall as Amazon and fast-fashion retailers bear down. Same-store sales for Abercrombie locations fell 7%.
But Hollister’s 5% increase helped offset most of those losses. In the first quarter, Hollister sales had increased 3% while Abercrombie sales had decreased 10%.
“We are encouraged by the clear progress across all brands,” Abercrombie CEO Fran Horowitz said Thursday in a statement.
Overall, the company’s sales fell 0.5% to $779 million for the quarter, compared with a year earlier. That outpaced S&P Global Market Intelligence projections of $759 million.
The company’s net loss widened 18% to $15 million, beating a projected $28 million loss.
Abercrombie said it expects same-store sales to be flat or grow slightly in the second half of the year.
Despite the progress, Abercrombie warned that sales would remain “promotional,” which could compromise the bottom line.