Abercrombie & FitchThe story of growth is starting to slow down.
The actions of the clothing retailer dropped 15% on Wednesday after the company published weaker advice than expected for its current quarter and in the 2025, and said that it expects its sales to increase more slowly than Wall Street was foreseen.
Abercrombie expects sales to increase between 3% and 5% during the 2025 financial year, well below 6.8% growth estimates, according to LSEG. During its current quarter, the company provides that profit per share will be between $ 1.25 and $ 1.45, less than $ 1.97.
A slowdown in the namesake brand of Abercrombie is to worsen concerns. The segment had led the growth of the company in the previous quarters more than Hollister, its chain which is more for adolescents.
During the quarter, Abercrombie sales increased by only 2%, while Hollister sales jumped 16%. Comparable sales at Abercrombie increased by 5%, while Hollister Comps increased by 24%.
The sales of Abercrombie brands continued to die in February and became negative for the month, said CEO Fran Horowitz during a call with analysts.
“Last year, we had a little flawless transition to spring, and this year, it’s a little more normalized. [The full company’s sales are] Positive for the month of February, seeing a little difference between brands. Hollister came very hard from a very, very strong Q4 and Abercrombie is a bit negative, “said Horowitz.
When asked where macroeconomic conditions or something else lead to this slowdown, the leaders did not really answer and said they saw in the place “green shoots for spring”.
Beyond the advice and the slowdown in growth, Abercrombie narrowly beat Wall Street’s expectations in its fourth tax quarter. Here is how the retailer worked in relation to what Wall Street provided, on the basis of a survey of LSEG analysts:
- Profit by action: $ 3.57 Against $ 3.54 expected
- Income: $ 1.58 billion Against $ 1.57 billion expected
The company’s declared net profit for the three -month period which ended on February 1 was $ 187 million, or $ 3.57 per share, against $ 158 million, or $ 2.97 per share, a year earlier.
Sales reached $ 1.58 billion, up 9%, compared to $ 1.45 billion a year earlier. Like other retailers, Abercrombie benefited from an additional sale week in the period of the previous year. This has negatively biased comparisons for many companies, but the sales of Abercrombie have jumped even with one week of sale less.
Beyond sales and profits, Abercrombie said that he expects another key measure – the operating margin – is less than Wall Street scheduled during the current quarter. Abercrombie expects its operating room to be between 8%and 9%, well behind estimates of 12.8%, according to Streetaccount.
In January, Abercrombie offered investors an overview of his vacation performance when he published a start of results and increased his fourth quarter prospects. However, his stock dropped that day because the forecasts showed that Bercrombie expected that his growth was moderate and thought that his operational margin would not increase beyond his previous forecasts. The concerns concerning his exploitation margin probably increase after Abercrombie published his tax guide in the first quarter.
However, all the advice of Abercrombie have not been a disappointment. During his current quarter, he expects sales to increase between 4%and 6%, in accordance with the expectations of 5.8%, according to LSEG. For the full year, it provides that the profit will be between $ 10.40 and $ 11.40 per share, which, in the middle, is higher than the expectations of $ 10.83 per share.
After about two years of explosive growth in actions and sales, Abercrombie activities seem to stabilize, and the markets can turn away from the largest star in retail in favor of names with a more immediate increase.
The company is still growing and working to build its international market, but it is not clear if it will always see the successful numbers that it has extinguished after having implemented a turnaround under the CEO Horowitz. It faces difficult previous comparisons, and part of the reversal buzz could start to fade.
In addition, consumers have been significantly cautious since the beginning of the year, which will always put pressure on specialized retailers who sell discretionary products such as clothes. Geopolitics, non -seasonal weather and mass tragedies such as forest fires in Los Angeles have attenuated consumer demand, but buyers are also concerned about things like the price increases. In February, consumer confidence has slipped to its lowest levels since 2021.
The fact that Hollister is now increasing more quickly than Bercrombie and that the majority of sales marks a turning point for the company and indicates that the adolescent -oriented brand could again be a greater growth engine to come. He also exerts pressure on management to do more to stimulate the Abercrombie brand and make sure it does not stagnate.
The start of the year was a bit worse than expected for a number of other companies, especially Target And Elf beauty. Like Elf, Abercrombie could have seen an impact on Tiktok Ban’s proposal, which led to the performance of the Cosmetics Society at the start of the year.
The two companies count strongly on Tiktok for marketing. In February, Elf Tarang Amin’s CEO told CNBC that he suspected the proposed ban on sales of cosmetics impacted because people did not publish things like videos “prepare with me” or clothes, which can generate sales.
In a press release in January, Horowitz pointed out that to move forward, Abercrombie will be more focused on the increase in profits than sales, because it seeks to “stimulate the value of long -term shareholders”.
“After two years expected of higher growth and less than two figures, I am as confident as ever in the power of our brands and our operating model that we advance, supported by the exceptional capacities that we have built,” said Horowitz. “In 2025, we will seek to pursue sustainable and profitable growth thanks to the execution of our playing books to win and keep customers worldwide. Our goal is to take advantage of our margin structure and our healthy assessment to increase dollars of operating income and action benefits at rates faster than sales.”
This suggestion was carried out on Wednesday when Abercrombie announced a new share repurchase authorization of $ 1.3 billion and said that it planned to spend $ 400 million on share buybacks in 2025.