NEW YORK — Abercrombie & Fitch Co. found its groove late last year, and its name was Hollister.
Thanks to much-improved same-store sales in the fourth quarter, including a 17 percent comp-store leap in January and a focus on store improvements and staffing, Abercrombie posted fourth-quarter earnings Tuesday that rose 10.6 percent and easily surpassed analysts’ estimates. Its lower-priced Hollister division led the quarter with a 74 percent surge in revenues.
The quarter’s results helped fuel the specialty retailer’s optimism regarding its existing international expansion strategy, which now includes plans for up to five new stores in Canada this year — with an eventual goal of 20 stores over time — as well as a confirmation that its first European stores are projected to open by late 2006. Abercrombie said it had hired a chief executive officer and a chief financial officer for its European business, whose roles became effective on Feb. 1. Their names were not provided.
Domestically, the development of its newest concept, Ruehl, also remains on track with the expected addition of five new stores in the year, in addition to the one Ruehl store opened in the just-completed quarter, near Detroit. Through several planned remodels and other store additions to its three other brands, most notably its Hollister concept, total square footage is seen increasing 9 percent this fiscal year. Total capital expenditures are forecast at $225 million to $250 million in 2005, versus $186 million in 2004.
Full-year 2005 earnings, meanwhile, are forecast within range of analysts’ consensus estimate, assuming a sales increase of 20 percent, at $2.80 to $3 a share, versus Wall Street estimates of $2.92. Abercrombie said it plans to begin offering only annual earnings guidance going forward, which it anticipates will be updated when past estimates differ materially. Abercrombie explained that it finds annual guidance “more meaningful” to investors because they tend to look more closely at the long-term performance of the company.
In the 13 weeks ended Jan. 29, net income rose to $104.5 million, or $1.15, compared with $94.5 million, or 97 cents, a year ago. The consensus on Wall Street was for a profit of $1.13 a share.
With a comp-store sales advance of 9 percent in the quarter, total sales increased 22.6 percent to $687.3 million from $560.4 million a year ago. Comps rose 4 percent at adult Abercrombie stores, 19 percent at Hollister and 16 percent in Abercrombie kids stores. Hollister alone saw sales per square foot for the year exceed $420. In the quarter, Hollister had sales of $210.2 million, up 74 percent.
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