Abercrombie & Fitch is surging after earnings beat expectations

Our third quarter results exceeded our expectations coming into the quarter and provide the strongest validation yet that our initiatives are working.

Adjusted earnings per share came in at $0.48, versus $0.22 expected. Wall Street expected revenues of $864.65 million for the third-quarter.

Dan Martensen/Abercrombie & FitchAbercrombie & Fitch shares jumped by as much as 20% in pre-market trading on Friday after the company posted third-quarter earnings results.

Abercrombie, once popular for its logo-emblazoned polo shirts, sweatpants and sweatshirts, has had a tough few years, struggling to cope with rapidly changing consumer tastes and stiff competition from relatively new entrants H&M HMb.ST and Inditex’s ITX.MC Zara – leaders in the fast fashion industry. Same-store sales at Abercrombie & Fitch stores fell 5%, but rose 3% at the company’s Hollister stores, the first time Hollister has seen a same-store sales bump since January 2012.

Comparable store sales across all of the retailer’s chains have been improving quarter by quarter, with the company’s Hollister brand reporting a return to positive sales in the quarter. “Inventories remain well controlled”.

Abercrombie & Fitch reported third-quarter sales of $878.6 million, beating the forecast for $862.8 million according to Bloomberg.

Comparable sales in the three months to the end of October were still 1% down but this was well ahead of market expectations for a 2.4% decline, and marked another improvement. During the same quarter in the prior year, the company earned $0.42 EPS.

Net income attributable to Abercrombie more than doubled to $41.9mln.

The company also recently declared a quarterly dividend, which will be paid on Wednesday, December 9th. Following the completion of the sale, the executive vice president now directly owns 36,983 shares in the company, valued at approximately $805,859.57.

In addition to the 23 new stores opened year-to-date, the company expects to open eight new stores in the fourth quarter, including six worldwide stores and two North American stores.