Abercrombie Stock Falls 9.2% Despite Q4 Earnings & Sales Beat

Core Viewpoint - Abercrombie & Fitch Co. reported strong fourth-quarter fiscal 2024 results, with sales and earnings exceeding expectations and showing year-over-year improvements, marking the eighth consecutive quarter of earnings beats [1][2]. Financial Performance - Earnings per share (EPS) for the fourth quarter reached $3.57, a 20.2% increase from $2.97 in the previous year, surpassing the Zacks Consensus Estimate of $3.48 [2]. - Net sales amounted to $1.58 billion, reflecting a 9% year-over-year increase on a reported basis and a 10% increase on a constant-currency basis, exceeding the Zacks Consensus Estimate of $1.56 billion [3]. - Comparable sales improved by 14%, driven by broad-based growth across regions and brands, particularly strong traffic [3]. Regional and Brand Sales - Sales in the Americas rose 11% year over year to $1.32 billion, while EMEA sales increased 2% to $224.5 million, and APAC sales fell 4% to $40.7 million [6]. - The Abercrombie brand saw a 2% year-over-year sales increase to $772.7 million, while Hollister's sales grew 16% to $812.2 million [7]. Margins and Expenses - Gross margin for the fourth quarter was 61.5%, down 140 basis points year over year, primarily due to increased freight costs [8]. - Selling expenses were $526.4 million, up 5.5% year over year, but as a percentage of sales, they decreased to 33.2% [9]. - Operating income increased by 14.9% to $256.1 million, with an operating margin of 16.2%, up 90 basis points from the previous year [10]. Financial Health - The company ended the fourth quarter with cash and cash equivalents of $772.7 million and no net long-term borrowings, indicating a stable financial position [11]. - A new $1.3 billion share repurchase authorization was announced, with plans to repurchase $100 million in the first quarter and $400 million in fiscal 2025 [12]. Future Outlook - For the first quarter of fiscal 2025, net sales are projected to rise 4-6% from $1.02 billion in the previous year, with EPS expected between $1.25 and $1.45 [13]. - For fiscal 2025, the company anticipates sales growth of 3-5% from $4.95 billion, with an operating margin expected between 14-15% [14]. - The company plans to open 60 new stores, remodel 40, and close 20 in fiscal 2025 [16].