Abercrombie & Fitch cheers market with upbeat end to the year

Shares in Abercrombie & Fitch took off on Wednesday as the US clothing retailer posted a stronger-than-expected end to the year.

The chain, which also owns the Hollister brand, said comparable stores rose 3% in the three months to 2 February. Analysts had been looking for a 1.5% increase.

Fourth-quarter net sales declined 3% to $1.2bn, although the fall was not as steep as some on Wall Street had been expecting, while adjusted earnings per share eased from $1.38 to $1.35, also better than forecasts.

The retailer said there had been “a combined adverse impact of approximately 6% due to the calendar shift, the loss of fiscal 2017’s 53rd week and foreign currency fluctuations”.

Full year net sales rose 3% to $3.6bn, while earnings per share increase to $1.15 from $0.65.

Fran Horowitz, chief executive, said: “We ended 2018 on a strong note, recording our sixth consecutive quarter and second consecutive full year of positive comparable sales, while exceeding $1bn in annual digital sales.”

Looking ahead, Abercrombie & Fitch expects fiscal 2019 net sales to be ahead by 2% to 4%, “driven by positive comparable sales and net new store contribution, partially offset by an adverse impact of changes in foreign currency exchange rates of approximately $15m, primarily in the first quarter”. Net sales in the first three months are expected to be flat.

It also said it would close up to 40 stores, primarily in the US, and launch 85 new outlets through a mixture of openings and refurbishments.

The stock surged nearly 14% ahead of the opening bell.