Abercrombie & Fitch, fueled by strong sales growth performance at its brands and across regions, reported solid top and bottom-line gains for the fourth quarter and full year.
The company has undergone dramatic transformation over the past several years involving adept use of social media, staying close to its target customers, refining its offerings and recasting its store network in part by closing oversized unproductive locations and setting more efficient formats.
For the fourth quarter, which ended Feb. 3, the company reported net income of $158.48 million, up from $38.33 million in the year- ago period.
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Net sales reached $1.5 billion, up 21 percent from $1.2 billion in sales in the year ago period. The additional week in fiscal 2023 benefited fourth quarter net sales by about $50 million, or 430 basis points.
Comparable sales rose 16 percent.
By brand, Abercrombie sales rose 35 percent to $755.2 million from $560.44 million. Hollister sales increased 9 percent to $697.7 million from $639.38 million.
“I am incredibly proud of how we performed throughout fiscal 2023, finishing with fourth quarter year-over-year net sales growth of 21 percent, which exceeded our January business update expectations. Our strong fourth quarter was fueled by sales growth across regions and brands. Abercrombie brands grew net sales 35 percent, continuing an impressive multi-quarter growth trend, while Hollister brands grew 9 percent , delivering a third consecutive quarter of sales growth. By staying close to our customers, tightly controlling inventories and continuing to operate with financial discipline, our team delivered year-over-year fourth quarter operating margin expansion of 800 basis points, reaching 15.3 percent.
For 2024, the company forecasts net sales growth in the range of 4 to 6 percent from $4.3 billion in fiscal 2023, which includes the adverse impact of about $50 million from the 53rd reporting week in fiscal 2023. Abercrombie brands are seen continuing to outperform Hollister brands and the Americas will continue to lead the regional performance.
The company also expects the year-over-year growth rate to be higher in the first half of the year, partially due to the calendar shifts from the 53rd week in 2023.
For the first quarter of fiscal 2024, the company expects net sales to be up low double-digits to fiscal first quarter 2023 level of $836 million.
“Following several years of transformation across our brands, people and operating model, fiscal 2023 was a defining year for our company. In the first full year of our Always Forward Plan, we executed our playbook, delivering the right product, voice and experience across regions and brands to our global customers,” the CEO said.
A&F’s Always Forward Plan sets targets for growth at the brands, digital acceleration, and financial discipline.
For all of 2023, net income reached $328.12 million versus $2.82 million in 2022. Net sales were $4.28 billion in 2023 compared to $3.7 billion in 2022.
“Abercrombie brands finished an exceptional year with 27 percent net sales growth over 2022, reflecting a strong 10 percent compound annual growth rate from fiscal 2019,” Horowitz said. “Hollister brands completed a return to sales growth of 6 percent over fiscal 2022, reconnecting with teen customers. Operationally, we fueled sales growth using our well-developed inventory chase capabilities while funding critical long-term investments in our people, stores and key technology platforms. Compared to 2022, we grew annual net sales 16 percent, improved gross profit rate by 600 basis points and delivered an operating margin of 11.3 percent, our highest in 15 years and above our 2025 Always Forward Plan operating margin target.”
