What happened
Shares of Abercrombie & Fitch (ANF 4.06%) were surging last month after the teen apparel retailer got a boost from its strong fourth-quarter earnings report. According to data from S&P Global Market Intelligence, the stock finished the month up 25%.
As you can see from the chart below, the stock jumped after the earnings report came out at the beginning of the month and moved higher again at the end of March.
So what
Abercrombie stock jumped 20% on March 6 after the company's earnings report showed off better-than-expected results during the key holiday quarter, beating estimates on both the top and bottom lines. Comparable sales increased 3% in the quarter, following a 9% pop in the quarter a year ago as the company posted its sixth straight quarter of comparable sales growth. The once-struggling brand has made changes like getting rid of shirtless models and turning up lights in its stores that have given the brand a friendlier feel, which has helped bring back customers.
Image source: Getty Images.
Comparable sales at its namesake stores actually fell 2%, but comps for Hollister, the brand that makes up the majority of its revenue, rose 6%. Gross margin increased 70 basis points showing that improving sales didn't come at the expense of markdowns. Adjusted earnings per share fell from $1.38 to $1.35, though that was partly due to having one fewer week in the quarter. Still, that figure easily beat estimates at $1.15.
CEO Fran Horowitz touted the company's strong performance, and said, "We continue to keep the customer at the center of everything we do and are excited about the future of our brands. Our transformation initiatives are gaining traction and keeping us on track to deliver our previously disclosed fiscal 2020 targets."
Now what
Looking ahead, the company offered a solid outlook for 2019, calling for comparable sales growth in the low single digits and a slight increase in gross margin, signaling modest growth in earnings per share, though it did not give guidance in that category.
The retailer also said it would close up to 40 stores in the U.S. but add 85 new store experiences, including new store prototypes and remodeled stores, and rightsize as it continues with its transformation.
