Shares of Abercrombie & Fitch Co. stock soared the most they had in three years after third-quarter revenue exceeded that projected by experts.
That revenue was over $878.6 million, buoyed by a strong showing from its Hollister division. That figure was down 3.6 percent compared to the previous year, but it topped the estimated projection by some $15 million.
This positive sales report could be proof positive that Abercrombie’s shift in strategy is paying dividends, especially when it comes to its younger, Southern California-inspired Hollister unit.
In both its Abercrombie and Hollister stores, the company started selling new, more stylish products. It also updated the stores, trying to bring back customers who thought they were too dark and loud by raising the lights and dialing the music down.
Arthur Martinez, the executive chairman of the New Albany, Ohio, company said:
Our third quarter results exceeded our expectations coming into the quarter and provide the strongest validation yet that our initiatives are working. We have seen positive customer response to the actions we have been taking on a number of fronts. We saw continued sequential improvement in comparable sales, led by positive comparable sales for our Hollister brand and across our international business.
Comparable sales at Hollister rose by 3 percent during the third quarter, far exceeding analysts’ projections of a 1.1 percent decline. Hollister is responsible for more than half of the company’s revenue. Comparable sales include those which are made online and those from stores open at least a year, excluding currency fluctuation effects.
The company is said to be taking a cautious approach despite the good news as similar mall-based competitors like Macy’s Inc., and Gap Inc., have put out poor reports lately. According to Martinez, the company expects fourth-quarter comparable sales to change little.
As Abercrombie’s posiitve report came out, shares shot up 25 percent to $24.37 in New York. This represents the biggest rise since November 2012.
