Despite getting buffeted by COVID-19's economic damage along with the rest of the retail sector, apparel company Abercrombie & Fitch (NYSE:ANF) lost less ground during the second quarter than expected, trouncing analyst estimates in both revenue and earnings per share (EPS). While sales were still down by 17% overall, the enterprise managed to generate earnings per share, far outperforming Q2 2019's loss.
Abercrombie & Fitch overshot analyst consensus massively, according to Reuters. Analysts expected an $0.83 loss per share for Q2 2020, but adjusted EPS actually clocked in at a positive $0.23, beating by $1.06. The 13 analysts polled also predicted $658.44 million in net sales for the period. While the actual revenue reported, $698 million, is down 17% year over year, it was still a positive surprise of 6%.
Earnings per share made remarkable gains year over year, from a $0.48 loss per share to this year's $0.23 in earnings. The jump is partly explained by 2019's "flagship store exit charges" of $0.50 per share.
Abercrombie's efforts to sharply reduce costs earlier in the quarter seem to have paid off. The company said it would slash expenses by $200 million, reducing salary expenditures and skipping dividends. Adjusted operating expense as a percentage of sales fell by 610 basis points.
An actively managed e-commerce push also helped the bottom line. "We were able to grow our highly penetrated digital revenue base by 56% year-over-year to $386 million," CEO Fran Horowitz said in a statement.
The company said it expects a similar performance, including a 15% to 20% year-over-year sales drop, for the third quarter. Abercrombie's stock value has rocketed upward more than 15% in today's trading.