$Abercrombie & Fitch (ANF.US)$ sank some 15% intraday Wednesday even though the clothing retailer beat analysts' estimates for fiscal Q2 earnings. What's going on?
ANF fell as much as 16.5% to a $166.61 session low in morning trading despite the fact the company said sales grew 21% Y/Y to $1.134 billion, beating analysts' consensus estimate of $1.101 billion.
Comparable sales also jumped 18% Y/Y, helping the company post adjusted EPS of $2.50 -- beating analysts' consensus of $2.22.
Among other seeming positives, ANF's Americas sales increased 23%, EMEA grew 16% and APAC sales climbed 3% Y/Y. Abercrombie brand sales also rose 26%, while Hollister sales improved 17% Y/Y. Gross profit margin also expanded 240 basis points Y/Y to 64.9% in the quarter.
Meanwhile, the company's operating-expenses ratio improved to 49.4% from 53.2% last year.
Operating income for the quarter also came in at $176 million vs. $90 million a year ago, with a margin expansion of 590 basis points Y/Y to 15.5%.
However, markets apparently didn't like CEO Fran Horowitz's comments about the company's business. She warned that "we continue to operate in an increasingly uncertain environment."
Looking ahead, Abercrombie said it expects Q3 net sales to grow in low double-digit percentages year over year. The company projects an operating margin of 13%-14% compared to 13.1% last year.
ANF also raised its FY24 net-sales-growth outlook to 12% to 13% (from around 10% previously), and revised its operating margin forecast to 14%-15% from the prior view of around 14%. The company continues to expect capital expenditure of about $170 million.
