Abercrombie & Fitch Co ANF shares are trading lower after the company reported third-quarter earnings.

Sales grew 14% year over year (Y/Y) to $1.21 billion, beating the analyst consensus estimate of $1.18 billion. Comparable sales jumped 16%. Adjusted EPS of $2.50 beat the analyst consensus estimate of $2.22.

Abercrombie brands delivered 11% comparable sales on top of 26% last year and Hollister comped 21% on top of 7% last year.

Americas sales increased 14%, EMEA grew 15% and, APAC sales climbed 32% Y/Y. Abercrombie brand sales rose 15%, while Hollister sales improved 14% Y/Y.

Gross profit margin expanded 20 basis points Y/Y to 65.1% in the quarter. Operating expenses, excluding other operating income, are net of $609  million for the quarter.

Operating income for the quarter was $179 million versus $138 million a year ago, with a margin expansion of 170 basis points Y/Y to 14.8%.

The operating cash flow was $403 million for the year-to-date period ended November 2. Inventories were $693 million, compared to $469 million as of February 3, 2024. As of November 2, the company held $683 million in cash and equivalents.

In the third quarter, the company repurchased shares worth around $100 million. The company has $102 million remaining on the share repurchase authorization established in November 2021.

Fran Horowitz, Chief Executive Officer, said, “For the sixth consecutive quarter, our global team delivered double-digit net sales growth. This great sales performance led to better-than-expected results on both the top and bottom lines. With broad-based growth across regions and brands, we continue to execute at a high level, leveraging our regional playbooks and operating model.”

“Based on our third quarter outperformance and outlook for the fourth quarter, we are increasing our full year outlook on sales and expect to be around the high end of the operating margin range shared last quarter.”

Abercrombie & Fitch also announced the promotion of Robert Ball to Chief Financial Officer, effective November 20, 2024. In his new role, Ball will serve on the company’s executive leadership team and continue to report to Scott Lipesky, Executive Vice President and Chief Operating Officer.

Lipesky, who served as the company’s CFO since 2017, was promoted to COO in May 2023, and will remain in that role, leading the company’s global operations and growth strategies.

Outlook: Abercrombie expects fourth-quarter net sales to grow in the range of 5% to 7% and an operating margin of around 16%.

Abercrombie & Fitch raised its FY24 net sales growth outlook to 14% -15% (from 12% to 13%) and revised the operating margin forecast to around 15% from the prior view of 14% – 15%.

The company continues to expect capital expenditure of about $170 million.

Investors can gain exposure to the stock via Two Roads Shared Trust Conductor Global Equity Value ETF CGV and First Trust Active Factor Small Cap ETF AFSM.

Price Action: ANF shares are down 3.57% at $148.98 at the last check Tuesday.

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