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Abercrombie, American Eagle lift holiday sales expectations

Abercrombie & Fitch at the Woodbury Common Premium Outlets in Central Valley, New York

By Deborah Mary Sophia

(Reuters) -Abercrombie & Fitch Co and American Eagle Outfitters Inc raised their sales forecasts for the holiday quarter on Monday as consumers snapped up their winter wear during the peak shopping season.

Shares of Abercrombie, which owns the Hollister label, jumped more than 11% in afternoon trade, while American Eagle climbed about 2%.

The apparel chains have been revamping their inventories to get rid of outdated styles, with Abercrombie replacing casual wear and athleisure clothing with new styles that have drawn more shoppers to its stores.

Abercrombie's 2022 holiday assortment was a "marked improvement on the selection being offered earlier in the year", said GlobalData Managing Director Neil Saunders, noting that seasonal staples such as flannel shirts, pajamas, and outerwear performed very well.

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Ohio-based Abercrombie said it now expects net sales to rise between 1% and 2% in the holiday quarter, compared with its prior forecast for a 2% to 4% fall.

It projected fourth-quarter operating margin between 6% and 8%, up from a range of 5% to 7% estimated previously.

The company said overall sales had improved from the third quarter, but its Hollister brand's performance was still expected to lag 2021 levels in the holiday quarter.

American Eagle also said its fourth-quarter revenue and profit margins were tracking at the high end of its forecasts, benefiting from its decision to right-size inventory and a better-than-expected performance at its American Eagle label.

Meanwhile, yoga wear maker Lululemon Athletica Inc lowered its expectations for fourth-quarter gross margins, sending its shares down about 8% on Monday. Last week, department store chain Macy's Inc projected holiday-quarter sales toward the lower end of its previous forecast.

(Reporting by Deborah Sophia in Bengaluru; Editing by Subhranshu Sahu and Devika Syamnath)