Shares of specialty apparel retailer, Abercrombie & Fitch Co. (NYSE: ANF) leaped over 30% in premarket trading on Wednesday after the company announced fiscal third-quarter results that topped Street’s estimates thanks to spectacular sales growth in international markets even as it projected full-year earnings guidance above analysts’ consensus estimate.
The retailer now expects full-year earnings to fall in the range of $2.85 – $3.00 a share. Analysts polled by Thomson Reuters had most recently forecasted full-year earnings at $2.48 a share.
Strong earnings guidance holds lots of significance as the company had to encounter challenging times during last year as sales plummeted amid rising completion from its rivals. The company was criticized for its slow response to rapidly changing fashion habits among fashion conscious consumers. The company started losing market share to its rivals that were more receptive to changing industry’s dynamics.
While ANF’s rival Foreever21 offered more reasonably priced clothing for more fashion seasons, its peers such as American Eagle Outfitters (NYSE: AEO) and Gap Inc. (NYSE: GPS) paid more attention to inventory management and changing fashions.
Besides taking steps to stop flagging sales, the company has now increased its sourcing from the United States and Central America to bolster its both top line and bottom line growth. The company also put on hold its decision to expand in stagnating European markets.
For the fiscal third quarter which ended October 27, the company reported earnings of $71.5 million or 87 cents a share, up from $50.9 million or 57 cents, in the year earlier quarter. Analysts polled by Thomson Reuters were expecting earnings of 59 cents a share.
Sales for the period leaped 9% to $1.17 billion. Sales in the international markets skyrocketed 37%.
Same-store-sales, a key gauge on retailer’s performance since it excludes sales impact from those stores that were opened less than 12 months ago or stores that were shut in last 12 months, dropped 3% during the quarter—a marked improvement over fiscal second quarter when same-store-sales plunged 10%. In the fiscal fourth quarter, the company is expecting same-store-sales to fall into mid single digit percentage.