Abercrombie & Fitch Co. (NYSE: ANF) reported its fourth quarter financial results on Tuesday morning and surpassed estimates in both earnings and revenue. The better-than-expected results sent Abercrombie’s shares surging by 17.7% shortly after the opening bell.
For the fourth quarter, Abercrombie reported earnings of USD 1.35 on net sales of USD 1.15 Billion. Analysts expected earnings of USD 1.15 per share on revenue of USD 1.13 Billion.
The retailer reported positive comparable sales growth of 3% for both the quarter and the full year, on top of 9% and 3% last year, respectively.
Despite Abercrombie topping its revenue estimates, revenue was still 3% lower compared to the same quarter last year. However, the Company reported a decrease in its expenses for the quarter.
Store and distribution expenses decreased slightly from USD 437.3 Million last year to USD 434.5 Million. Marketing, general, and administrative expenses also decreased from USD 128.1 Million to USD 118.9 Million.
Abercrombie’s brand sales fell by 9% in the quarter, but decreased by 1% for the full year. Meanwhile, the Company’s Hollister brand increased by 1% for the quarter, but gained 6% for the year.
The Company’s Hollister brand saw stronger revenue due to its increase in comparable sales. For the quarter, Hollister’s comparable sales increased by 6% and as for the full year, it increased by 5%.
Fran Horowitz, Chief Executive Officer, said, “We ended 2018 on a strong note, recording our sixth consecutive quarter and second consecutive full year of positive comparable sales while exceeding USD 1 Billion in annual digital sales. I am proud of our team and all we have accomplished this year. Most importantly, while delivering on the top-line, we drove gross profit rate improvement and operating expense leverage resulting in 100 basis points of adjusted EBIT margin expansion and a 77% improvement in adjusted net income for the full year.
For the first quarter of fiscal 2019, Abercrombie projects net sales to be flat year-over-year. Comparable sales is expected to be in the range of flat to plus 2%.
As for the full year, Abercrombie expect net sales to increase by 2% to 4% year-over-year, while comparable sales is expected to be up in the low-single digits. The Company also expects to close 40 stores, primarily within the U.S.