US’ Abercrombie & Fitch Co., a leading, global, omnichannel specialty retailer, has reported net sales of $3.7 billion, flat as compared to the previous year on a reported basis, but sales showed a 2 per cent growth on a constant currency basis. In the fourth quarter (Q4) of FY22, the company saw a 3 per cent year-on-year (YoY) increase in net sales, reaching $1.2 billion.

The company's gross profit rate in FY22 fell approximately 540 basis points as compared to the previous year, driven mainly by higher freight and raw material costs and the adverse impact of exchange rates. In Q4 FY22, gross profit rate decreased by 260 basis points as compared to the previous year.

Abercrombie & Fitch’s operating expenses, excluding other operating income, net, were up by 2 per cent in FY22, as compared to the previous year. Operating expenses as a percentage of sales increased to 54.5 per cent from 53.3 per cent last year. However, the company's operating income of $93 million on a reported basis and $107 million on an adjusted non-GAAP basis was significantly lower than the previous year's operating income of $343 million and $355 million, respectively, the company said in a press release.

In Q4 FY22, operating expenses, excluding other operating income, net, decreased slightly as compared to Q1 FY21. Operating expenses as a percentage of sales decreased to 48.3 per cent from 50.2 per cent last year. The company's operating income in Q4 FY22 was $87 million on a reported basis and $92 million on an adjusted non-GAAP basis.

For FY23, Abercrombie & Fitch Co. has projected a net sales growth in the range of 1 to 3 per cent from $3.7 billion in 2022, with the expectation that Abercrombie will continue to outperform Hollister, and the US market will continue to outperform the international market. The operating margin is projected to be in a range of 4 to 5 per cent.

In Q1 FY23, the company expects the net sales to be around flat to Q1 FY22 level of $813 million. Operating margin is projected to be in the range of breakeven to 2 per cent compared to minus 1 per cent in Q1 FY22.

“We had a solid finish to the quarter delivering year-over-year, fourth quarter net sales growth of 3 per cent on a reported basis and 5 per cent on a constant currency basis. Results were driven by continued, strong momentum in the Abercrombie & Fitch brand and sequential improvement in Hollister as we continue to stabilise the brand’s performance,” said Fran Horowitz, Chief Executive Officer.

Fibre2Fashion News Desk (DP)

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