Abercrombie & Fitch Digital Sales Drive Earnings Above Estimate

Abercrombie's second-quarter digital revenue climbed 56%, helping drive earnings beyond what analysts expected.
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Abercrombie & Fitch  (ANF) - Get Report shares jumped after the clothing retailer reported stronger-than-expected fiscal-second-quarter earnings, as soaring digital sales helped lessen the blow of the coronavirus pandemic.

Abercrombie shares recently traded at $12.05, up 8.3%. They had slumped 36% year to date through Wednesday.

In the quarter ended Aug. 1, Abercrombie earned $5.5 million, or 9 cents a share, swinging from a loss of $31.1 million, or 48 cents, in the year-earlier quarter. 

Adjusted earnings per share registered 23 cents, compared with analysts’ consensus projection of an 83-cent loss, according to a FactSet survey. 

Revenue totaled $698.3 million, down 17% from $841.1 million in the year-ago quarter but topping the FactSet analyst consensus of $658 million.

“By managing to the tough current environment and our daily demand trends, we were able to grow our highly penetrated digital revenue base by 56% year-over-year to $386 million, expand our gross-profit rate by [1.4 percentage] points and leverage operating expense, resulting in robust operating-margin improvement,” Chief Executive Fran Horowitz said in a statement.

“We ended the quarter with approximately $1.1 billion of liquidity, reflecting $187 million of operating cash flow generated in the second quarter.”

She said, “We are proud of our recent execution, although cognizant and humbled by the many unknowns we as individuals and as a company continue to face.”

The company expects fiscal-third-quarter revenue to slip 15% to 20%.

For the fiscal first quarter, Abercrombie had reported a wider-than-expected loss, thanks to the coronavirus pandemic, which closed stores and kept shoppers at home.