Shares of Abercrombie & Fitch Co. jumped 20.7 percent in pre-market trading after the company posted third-quarter results that beat Wall Street’s expectations.
Net income for the quarter ended Oct. 28 rose 2.8 percent to $10.1 million, or 15 cents a diluted share, from $7.9 million, or 12 cents, a year ago. On an adjusted basis, EPS was 30 cents for the quarter, compared with adjusted EPS of 2 cents in the year-ago quarter. Net sales rose 4.5 percent to $859.1 million from $821.7 million, with comparable sales gaining 4 percent. By brand, the Hollister brand saw comps gain 8 percent, while its core Abercrombie brand was down 2 percent, which was an improvement from a fall of 7 percent in comparable sales in the second quarter of fiscal 2017.
Those results bested Wall Street’s consensus estimate of 22 cents on sales of $818.9 million. Investors were pleased with the results, sending shares up to $15.15.
Fran Horowitz, chief executive officer, said, “We are pleased by the clear progress across all brands, delivering another quarter of sequential comparable-sales improvement, and a return to positive comparable sales. This sales performance in combination with disciplined expense management drove profit growth, despite the promotional environment.”
The ceo cited the company’s “effective engagement” across all channels to drive traffic and conversion trends. “Hollister delivered another quarter of sales growth across all channels and geographies, and Abercrombie is beginning to show signs of stabilization,” she said.
Horowitz also said, “We continue to execute on our strategic plan, and we are positioned to compete in what we expect to be a challenging and promotional fourth quarter.”
For the fourth quarter, the company said it expects comparable sales to be up low-single digits, with net sales up mid to high-single digits, including benefits from a fifty-third week.
The company raised its planned capital expenditure for the year to $110 million, up from the prior guidance of $100 million.