Abercrombie and Fitch, Lululemon, and American Eagle Outfitters have all raised their fiscal fourth-quarter outlooks, indicating a positive trend in holiday spending. Drawing in customers looking for both gifts and personal items, these retailers are optimistic about their performance during the November and December period. This news has been met with varying levels of enthusiasm from Wall Street, reflecting concerns about future competition for athletic apparel retailer Lululemon.
Despite some reservations, shares of Abercrombie and American Eagle shot up more than 8% following their raised outlook. Lululemon, on the other hand, saw a slight decrease of less than 1% as investors weighed the forecast tweak against potential future challenges in the market. The quarterly forecasts were shared ahead of meetings with investors and analysts at the ICR Conference in Orlando, with other retailers also expected to release holiday updates during the event.
Holiday spending estimates so far have been positive. Online sales, according to Adobe Analytics, rose 4.9% year over year to reach $222.1 billion in November and December. Meanwhile, preliminary data from Mastercard SpendingPulse, which tracks both online and in-store retail sales across various payment methods, showed a 3.1% growth in retail sales during the holiday season, excluding automotive sales.
While it remains unclear which retailers successfully captured a larger share of holiday spending, American Eagle appears to be a winner. The company reported that quarter-to-date revenue had increased by approximately 8% as of December 30, 2021, with both its namesake brand and Aerie performing well. American Eagle expects its revenue and operating profit for the fiscal fourth quarter to surpass previous expectations.
Abercrombie, another mall rival, also anticipates positive results. It projects net sales to increase in the mid-teens and its operating margin to come in around 15% for the fiscal fourth quarter. These figures are an improvement from its previous expectations of net sales growing only in the low double-digits and an operating margin ranging from 12% to 14%. Abercrombie’s CEO, Fran Horowitz, expressed confidence in the company’s performance, noting record-breaking sales for the women’s business, growth in the men’s division, and higher profits for the Hollister brand due to improved merchandise and inventory management.
Lululemon, although maintaining a positive outlook, made more modest adjustments to its fourth-quarter forecast. The company expects net revenue for the quarter to fall between the range of $3.17 billion and $3.19 billion, compared to the previous range of $3.135 billion to $3.17 billion. Additionally, diluted earnings per share are projected to be in the range of $4.96 to $5.00, up from the previous range of $4.85 to $4.93.
Looking ahead, the retail industry’s earnings season is set to kick off in mid-February. Major players like Walmart, Target, and Home Depot will announce their financial results, providing a comprehensive view of the industry’s overall performance during the holiday season.
Abercrombie and Fitch, Lululemon, and American Eagle Outfitters have all raised their fiscal fourth-quarter outlooks, indicating a successful holiday season. The market’s response to these reports has been mixed, with Abercrombie and American Eagle experiencing substantial stock increases, while Lululemon faces concerns about future competition. Early holiday spending estimates have shown positive growth, although it remains uncertain which retailers specifically captured the largest share of consumer spending. Nonetheless, American Eagle stands out as a winner, reporting strong revenue growth and exceeding expectations for the fiscal fourth quarter. With the retail earnings season approaching, the performance of major retailers like Walmart, Target, and Home Depot will provide further insights into the industry’s holiday success.
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