Abercrombie Soars as ‘90s Fashion Comeback Sparks Outlook Boost

(Bloomberg) — Abercrombie & Fitch Co. shares jumped after the retailer blew past first-quarter sales estimates, extending its bounce back from the teen fashion graveyard.

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The stock climbed as much as 19% in New York trading for its biggest gain since Aug. 23. Abercrombie shares were already trading at an all-time high and have now more than doubled this year.

Revenue rose for the sixth straight quarter to $1 billion, with profit improving on fewer promotions and clearance deals. Same-store sales at the Abercrombie namesake brand climbed 29% in the period, compared with an estimate of 17% growth from two analysts surveyed by Bloomberg. Hollister’s comparable-store sales were up 13%, beating an estimate of 8%.

Abercrombie now expects net sales to rise around 10% for the year, up from a previous estimate of 4% to 6%, the New Albany, Ohio-based company said in its earnings release Wednesday.

The company continues to cater to the rapidly changing tastes of Gen Z and millennial consumers, with expanded offerings spanning wedding attire to office wear. Women’s dresses and new trends in denim including wide legs and low-rise baggy jeans helped fuel sales, Chief Executive Officer Fran Horowitz said on the earnings call. At Hollister, the company’s teen-oriented brand, the men’s division returned to growth.

Competitors haven’t been so lucky: VF Corp. the owner of Vans and Timberland reported a seventh consecutive quarter of falling sales last week, with a loss in each major brand.

William Blair analyst Dylan Carden said it’s hard to buy into the Abercrombie stock rally at this point when it’s unclear how much longer the company can keep up this pace of growth. He rates the shares the equivalent of a hold.

“We believe the biggest risk is simply one of visibility as to how long the company can sustain its current momentum,” Carden said in a research note.

(Updates shares in second paragraph.)

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