Abercrombie & Fitch, Dollar Tree Q2 Revenues Miss Estimates; Both Slash Outlook

U.S. retailers Abercrombie & Fitch Co. (ANF) and Dollar Tree Inc. (DLTR) on Thursday reported results for the second quarter, with results at Abercrombie & Fitch missing analysts’ estimates, while earnings at Dollar Tree surpassed analysts’ expectations by a penny, but quarterly revenues missed them. Both Abercrombie & Fitch and Dollar Tree slashed their respective guidance for the full-year 2022.

In regular trading on Nasdaq, Abercrombie & Fitch shares are plunging around 12.12 percent to trade at $16.39 and Dollar Tree shares are also plunging around 11.86 percent to trade at $146.29.

Specialty retailer Abercrombie & Fitch reported a net loss attributable to the company of $16.83 million or $0.33 per share, compared to net income of $108.50 million or $1.69 per share in the prior-year quarter.

Excluding items, adjusted net loss for the quarter were $0.30 per share, compared to adjusted earnings of $1.70 per share in the year-ago quarter.

Net sales for the quarter declined 7 percent to $805.09 million from $864.85 million in the same quarter last year. It was down 4 percent on a constant currency basis.

On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.22 per share on revenues of $843.56 million for the quarter. Analysts’ estimates typically exclude special items.

Abercrombie delivered its highest second-quarter sales since 2015 and its ninth consecutive quarter of average unit retail (AUR) growth.

Hollister brand sales were down 15 percent to $436.93 million, while Abercrombie brand sales grew 5 percent to $368.16 million from last year.

Sales in the U.S. decreased 4 percent to $578.09 million, and international sales declined 14 percent to $227.01 million from last year.

Gross profit margin was down approximately 730 basis points from last year, primarily driven by higher product costs.

Looking ahead, the company now projects net sales drop in the high-single-digits for the third quarter from last year’s $905 million and a decline in the mid-single-digits for the full-year 2022 from last year’s $3.7 billion, compared to the prior forecast for flat to up 2 percent.

The Street is looking for net sales $896.01 million for the quarter and net sales growth of 0.4 percent to $3.73 billion for the year.

Meanwhile, Dollar Tree reported that net income increased to $359.9 million or $1.60 per share from $282.4 million or $1.23 per share in the prior-year quarter. Net sales for the quarter grew 6.7 percent to $6.77 billion from $6.34 billion in the same quarter last year. Same-Store Sales were up 4.9 percent on a constant currency basis.

The Street expected the company to report earnings of $1.59 per share on revenues of $6.79 billion for the quarter.

Net sales at Family Dollar stores increased to $3.19 billion from $3.08 billion, with same-store sales growth 2.0 percent, and net sales at Dollar Tree stores grew to $3.57 billion from $3.26 billion, with same-store sales growth 7.5 percent.

Gross margin for the quarter improved 200 basis points, primarily driven by improved initial mark-on and leverage on distribution and occupancy costs, partially offset by higher freight costs.

Looking ahead to the third quarter, the company estimates earnings in a range of $1.05 to $1.20 per share on consolidated net sales between $6.75 billion and $6.87 billion, based on a mid-single-digit increase in same-store sales for the enterprise.

Analysts expect the company to report earnings of $1.81 per share on sales of $6.87 billion for the quarter.

For fiscal 2022, the company now projects earnings in a range of $7.10 to $7.40 per share on consolidated net sales between $27.85 billion and $28.10 billion, based on a mid-single-digit increase in same-store sales and about 3.5 percent selling square footage growth.

Previously, the company expected earnings in a range of $7.80 to $8.20 per share on consolidated net sales between $27.76 billion and $28.14 billion.

The Street is looking for earnings of $8.19 per share on sales of $28.16 billion for the year.

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