Abercrombie & Fitch exceeded Wall Street forecasts and cut its loss in the first quarter amid strong demand for Hollister and an upturn in its namesake brand.
The apparel retailer reported a net loss of $41.5 million, or 62 cents per share, for the quarter ended May 5, down from a net loss of $61 million, or 91 cents per share for the the year-ago period. Excluding certain items, the company reported an adjusted net loss per share of 56 cents for the quarter. Analysts has expected a loss of 77 cents.
Net sales increased 11% to $730.9 million, ahead of Street projections. Direct-to-consumer net sales increased 14% to $200.7 million from last year, accounting for approximately 27% of total net sales. By brand, net sales increased 13% to $423.6 million for Hollister and increased 7% to $307.3 million for Abercrombie from last year.
Total same-store sales rose 5%. By brand, same-store sales 6% at Hollister and 3% at Abercrombie.
“Results exceeded our expectations driven by a 5% increase in comparable sales, gross margin expansion, and 460 basis points of expense leverage,” said CEO Fran Horowitz. “Hollister continued to drive strong sales growth across channels and geographies and Abercrombie built momentum with another quarter of positive comparable sales led by strength in North America.”’
The company plans to open 22 full-price stores in fiscal 2018, with 13 Hollister and nine Abercrombie locations. It anticipates closing up to 60 stores in the U.S. during the year through natural lease expirations.
For analysis of Abercrombie’s results, click here.