Abercrombie & Fitch (NYSE:ANF) stock jumped as much as 20% in pre-market trading after the retailer posted a first-quarter profit and raised its full-year sales guidance after a strong start to the year.
The New Albany, Ohio-based company said “decade-high” 1Q net sales were led by 14% growth from Abercrombie brands.
For the quarter ended April 29, 2023, net sales rose 3% to $836 million and were 4% higher on a constant currency basis, beating Wall Street’s estimate for sales of $814.5 million.
Its gross profit margins improved by 570 basis points to 61%, while it swung to an operating profit on an adjusted non-GAAP basis of $38 million, from a $6 million loss a year earlier.
Net income per diluted share, also on an adjusted, non-GAAP basis, rose to $0.39 from a $0.27 loss previously.
“Abercrombie’s offering is resonating meaningfully with our target customer, setting several other sales records this quarter across genders, categories and geographies,” CEO Fran Horowitz said in an earnings statement.
“Work continues in Hollister brands, where we managed a healthy business from a gross profit rate and inventory perspective and continued to improve the assortment as we prepare for the summer and back-to-school seasons.”
For the full year, the company now expects net sales growth of 2% to 4%, up from previous guidance of 1% to 3%, with an improved operating margin in a range of 5% to 6%.
“Looking ahead, we remain cautiously optimistic on consumer demand and our ability to react to a dynamic macro environment, further supported by our strong balance sheet,” Horowitz added.
Shortly before the market opened, the company’s shares were up 17% at $23.01.
Contact the author at stephen.gunnion@proactiveinvestors.com