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Abercrombie & Fitch same-store sales grow in US, shares down

Brian Sozzi
Editor-at-Large

Tis’ almost Black Friday for Abercrombie & Fitch (ANF). But first, a mixed set of third quarter earnings for investors to get through.

Abercrombie & Fitch probably turned some heads on Tuesday morning for saying on its earnings release it saw same-store sales growth in the U.S. at both the namesake chain and Hollister. The company tells Yahoo Finance same-store sales rose about 3% at each brand. In the wake of the third quarter apparel disasters at Macy’s, Kohl’s and Gap amid unfriendly weather and execution missteps, no doubt a thumbs up to Abercrombie for showing pluses in the sales column.

That said, Abercrombie did have another challenging quarter internationally and gross profit margins came in lighter than guidance. Hence, the company fell short versus Wall Street estimates on sales and adjusted earnings.

Here is how Abercrombie’s third quarter stacked up:

  • Net sales: $863.5 million vs. estimates for $869.3 million

  • Earnings per share: $0.23 vs. estimates for $0.24

  • Total same-store sales: flat vs. estimates for a 0.1% increase

  • Abercrombie & Fitch same-store sales: 3% increase vs. estimates for a 0.1% increase

  • Hollister same-stores: -2% decline vs. estimates for no change in same-store sales

  • Gross margin: 60.1% vs. estimates for 60.3%

Picture of the Munich Abercrombie & Fitch shop at night. Abercrombie & Fitch is an American retailer that focuses on upscale casual wear for young consumers

Abercrombie & Fitch’s sales gain, in particular, is worth highlighting. The brand has been a key focus by CEO Fran Horowitz this past year, with her installing new leaders that have improved marketing and taking the apparel chain’s look into the more sophisticated millennial vibe.

Horowitz tells Yahoo Finance she thinks the Abercrombie’s brand has reached its long-awaited inflection point, and that what was seen in the third quarter is sustainable moving forward.

Bring on the holiday season

Investors appeared to lock in on Abercrombie’s surprising U.S. sales numbers — the stock is up about 4% in pre-market trading. Horowitz tells Yahoo Finance the company exited the third quarter with momentum continuing into the fourth quarter. Thank you friendlier weather.

Horowitz did not rule out some coming “tough decisions” with respect to the company’s international store base. Given challenges in markets such as Hong Kong and Britain (protests and Brexit, respectively) it would make sense to further prune the store base.

Nevertheless, thank you new team at the Abercrombie & Fitch brand, says investors.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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