Abercrombie & Fitch beat Q3 earnings with strong in-store sales

Yahoo Finance’s Julie Hyman and Brian Sozzi report on Abercrombie & Fitch Q3 earnings as in-store sales grew by 10%.

Video Transcript

JULIE. HYMAN: Let's talk Abercrombie and Fitch this is another example here where the numbers look pretty good but the stock is trading lower. Abercrombie shares are down by 12%. But we have seen the companies report on earnings and sales I believe came out ahead of estimates. So again here, I'm not sure what is going on. I mean, I guess the stock has been performing well as of late. So that's perhaps partially what is perhaps baked in here with the earnings reaction we're seeing today.

BRIAN SOZZI: Julie, we leave nothing on the table here. We're open books on Yahoo Finance. I am absolutely shocked by this market reaction to Abercrombie and Fitch. Even more shocked than the market reaction to Dick's Sporting Goods. US sales for Abercrombie up 10%. New $500 million stock buyback plan. CEO Fred Horowitz, who I'm talking to later in the 4:00 hour for our retail special, says the holiday season quote, "is off to a promising strat" so a lot of boxes ticked there. I'm shocked again, to see the stock down here about 13% in the early going.

If you want to put a few red flags onto the field, sales in Europe and Asia were down year over year. And of course, when you see that alongside rising COVID cases in Europe, that might be a little bit of a concern. And gross margins down 30 basis points year over year. But I couldn't even put that into the positive category for a company dealing with high levels of inflation and likely out of stocks because of what's happening in overseas shipping.

JULIE. HYMAN: Yeah, and this stock by the way, is up 131% year to date so that also might be something to keep an eye on, that maybe some of this again, was baked in. When you talk about that gross margin number, yes, it fell year over year but it still looks like it was slightly above what analysts had been anticipating. So go figure.