Abercrombie Raises Outlook, Extending ‘90s Fashion Comeback

(Bloomberg) — Abercrombie & Fitch Co. raised its full-year outlook after it blew past first-quarter sales estimates and extended its bounce back from the teen fashion graveyard.

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The retailer now expects net growth to rise around 10% for the year, up from a previous estimate of 4% to 6%, the New Albany, Ohio-based company said in a statement Wednesday.

Revenue rose for the sixth straight quarter to $1 billion, with profit improving on fewer promotions and clearance sales. Same-store sales at the Abercrombie namesake brand climbed 29% in the period, compared with an estimate of 17% growth. Hollister’s comparable-store sales were also up 13%, beating estimates of 8%.

The company continues to cater to the rapidly changing tastes of Gen Z and millennial consumers, with expanded offerings spanning wedding attire to office wear. Women’s dresses and new trends in denim including wide legs and low-rise baggy jeans helped fuel sales, Chief Executive Officer Fran Horowitz said on the earnings call. At Hollister, the company’s teen-oriented brand, the men’s division returned to growth.

Competitors haven’t been so lucky: VF Corp. the owner of Vans and Timberland reported a seventh consecutive quarter of falling sales last week, with a loss in each major brand.

Abercrombie shares were up 5.8% at 9:33 a.m. in New York, extending an all-time high. The stock has risen 83% so far this year, compared with a 10% gain in the S&P 500 Index.

William Blair analyst Dylan Carden said it’s hard to buy into the stock rally at this point when it’s unclear how much longer Abercrombie can keep up this pace of growth.

“We believe the biggest risk is simply one of visibility as to how long the company can sustain its current momentum,” Carden said in a research note.

(Updates with trends in fourth paragraph, analyst comment in eighth.)

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