Abercrombie Falls After Holiday-Inventory Delays Hurt Results

(Bloomberg) -- Abercrombie & Fitch Co. fell as much as 18% on Wednesday after supply-chain woes in the crucial holiday quarter drove a disappointing earnings report.

The apparel maker said its adjusted earnings per share were $1.14, below the $1.27 average estimate among analysts surveyed by Bloomberg. Gross margin for the quarter, which ended Jan. 29, was 58.3%, slightly ahead of the estimate of 58.2% among analysts but down from a year earlier.

The stock dropped 16% to $30.11 at 10:31 a.m. in New York, erasing what had been a 2.9% advance for the shares so far in 2022. At the current level, it's the largest intraday decline since Nov. 23. Abercrombie stock has seen a number of double-digit swings following earnings reports in recent years.

Chief Executive Officer Fran Horowitz said in the earnings statement that inventory was delayed during the holiday shopping season amid supply-chain troubles and the surge of the omicron variant also hurt sales in January. Still, she said the company is pleased with its recent performance.

“As soon as those goods hit, we saw the consumer back and responding and resonating,” Horowitz said in an interview, adding that business has improved. The company doesn't anticipate supply issues for the remainder of the current quarter.

Like companies across the spectrum, Abercrombie is facing rising prices, with the apparel chain highlighting cotton in particular. “We will manage our way through inflation just as we have managed all these other challenges that have come our way in the past couple of years,” Horowitz said.

For now, activity is picking up, with consumers buying clothes to attend weddings and travel for spring break, she said.

For the full fiscal year, the New Albany, Ohio-based retailer expects net sales to increase 2% to 4% from $3.7 billion in fiscal 2022 as sales in the U.S. continue outperform those in other regions.