Hollister sales a bright spot for Abercrombie

Abercrombie & Fitch’s Hollister brand showed signs of improvement as it posted the first quarterly rise in comparable-store sales in a year.

“Results for the quarter reflect a still challenging and competitive retail environment,” said CEO Fran Horowitz in a conference call with analysts after Thursday’s earnings release. “However, we continue to make progress on our strategic priorities.”

While sales and net income fell for A&F, the 1 percent comparable-store sales increase at Hollister topped analysts’ predictions of a 0.7 percent decline.

The news sent the company’s shares soaring, closing at $13.32, up $1.63 or 13.9 percent.

Meanwhile, the Abercrombie brand reported a 13 percent decline in comparable-store sales. The brand renewal “is a work in Revenue Net income Earnings per share Revenue Net income Earnings per share progress,” Horowitz said.

While Wall Street saw signs of improvement, not every analyst was impressed.

Analysts at Stifel Financial Corp. said in a note to investors that even though Hollister merchandise is “trend right,” the Abercrombie brand still has a long way to go.

“Abercrombie’s fourthquarter assortments were trying to be everything to everyone,” Stifel analysts said. “Instead of focusing its merchandise on the postteen customer, Abercrombie watered down teen trends ... instead of making merchandise specifically for a more sophisticated consumer.”

Analysts at Wunderlich financial services firm were especially wary of the retailer’s recent relaunch of its Gilly Hicks underwear brand. “We do not view the relaunch of Gilly Hicks as a positive,” the analysts wrote in a note to investors.

Horowitz defended the brand, which was a separate chain of stores until early 2014, then available only online until early this year.

After relaunching Gilly Hicks in stores, “we had a very strong response,” she said after the conference call. “We brought it back because we had lots of customer requests for it.”

Abercrombie officials also saw hopeful signs in improving sales in international markets for both Abercrombie and Hollister brands, and positive comparable sales in both the U.S. and international markets for the company’s direct-toconsumer business, chiefly online and mobile.

The company continues to struggle with a highly competitive retail market that has resulted in heavy discounting, resulting in lower profit margins.

For the coming year, Abercrombie expects comparable-store sales to continue to improve, although the first half of the year will remain challenging.