Abercrombie & Fitch raises outlook after quarterly sales surge 20%

Abercrombie & Fitch on Tuesday blew past estimates as it posted a 20% jump in sales thanks to a strong back-to-school shopping season and growth at both its namesake brand and Hollister. 

The longtime mall retailer, which has bounced back after years of stagnation, also raised its outlook again as it continues to defy an overall slowdown across the apparel industry. 

Shares of the company climbed more than 2% on Tuesday. The stock is up 223% on the year.

Here’s how Abercrombie did in its fiscal third quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:

• Earnings per share: $1.83 vs. $1.18 expected
• Revenue: $1.06 billion vs. $981 million expected

The company’s reported net income for the three-month period that ended Oct. 28 was $96.2 million, or $1.83 per share, compared with a loss of $2.21 million, or 4 cents per share, a year earlier. 

Sales rose to $1.06 billion from $880 million a year earlier. 

For its fourth quarter, Abercrombie expects net sales growth to be up low double digits compared with the prior year, which is in line with the 11.6% growth analysts had expected, according to LSEG. 

It expects its operating margin to be in the range of 12% to 14%, compared with 7.7% in the year ago period and ahead of expectations of 11.3%, according to StreetAccount. The expected uptick is driven by a higher gross profit rate, lower freight costs and higher sales prices. 

For the full year, the company expects net sales to grow between 12% to 14%, up from a previous outlook of around 10% and ahead of the 10.8% uptick that analysts had expected, according to LSEG. It’s forecasting an operating margin of around 10%, up from its previous range of 8% to 9%, which is what analysts had expected, according to StreetAccount. The expected increase is driven by lower freight and raw material costs. 

Abercrombie CEO Fran Horowitz told analysts the company has…