Abercrombie Revenue-Growth Forecast Shows Signs of Slowing

Abercrombie & Fitch Co. offered a full-year revenue-growth forecast that would be a slowdown from the prior year, suggesting that the apparel retailer’s momentum might finally be flagging after a torrid run.

The company, which is particularly popular among millennials and Gen-Z, has experienced five consecutive quarters of revenue growth, outperforming other US apparel companies such as Gap Inc., which have struggled in recent years to keep customers coming back. CEO Fran Horowitz has credited Abercrombie’s recent growth to strength in categories like dresses, tailored pants and activewear.

The New Albany, Ohio-based company said it expects full-year net sales to rise 4 percent to 6 percent, roughly in line with analysts’ estimates but down from 21 percent growth in the prior fiscal year.

The shares were down 3.8 percent at 9:46 AM in New York. In the 12 months through Tuesday’s close, the stock had risen more than 400 percent.

That’s a notable turnaround for a company that was trading at its lowest share price on record four years ago. The company has invested heavily in e-commerce, closed underperforming stores and experimented with new store formats to better serve shifting consumer habits.

“Our playbook is working — we’ve been able to really expand the addressable market for Abercrombie adult,” Horowitz said on a call with analysts.

Horowitz said the company has become a destination for products beyond the jeans and T-shirts it was originally known for. For example, the company will launch a wedding-guest shop this week specifically for formal occasions, she said.

“Frankly, there’s no finish line,” Horowitz said of the company’s growth potential.

Abercrombie reported earnings of $2.97 a share for the quarter ended Feb. 3, beating analysts’ estimate of $2.82.

Comparable sales at the Abercrombie namesake brand surged 28 percent in the fourth quarter, which includes the key holiday season. At Hollister, the company’s brand that caters to teens and has been struggling to grow, same-store sales rose 6 percent.

By Olivia Rockeman

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