Abercrombie & Fitch reports earnings beat, announces new chairman

Yahoo Finance Live anchors discuss third-quarter earnings for Abercrombie & Fitch.

Video Transcript

[AUDIO LOGO]

BRIAN SOZZI: Welcome back, earnings in focus this morning. So let's dive into some reports before that opening bell on Wall Street. Abercrombie & Fitch shares ripping higher, after the retailer topped revenue estimates while posting better-than-expected losses on the bottom line. The company is cautiously optimistic as well on the holiday season, as that kicks into high gear.

I really think this stock result in the premarket, guys, is driven by one number, Abercrombie sales. That is that core Abercrombie namesake division, up 10% year-over-year. Now, Hollister was down 12% year-over-year. Kind of fits what we heard from Urban Outfitters last night. That lower income consumer under a little bit of pressure.

But that-- as long as that Abercrombie namesake brand works and sales are up, historically, this stock has worked. And if you go to the Abercrombie website, you just get a sense on why it might be working.

I mean, like our producer just said, who probably just ordered a couple hundred dollars worth of stuff offline. This is a different company. It is a different vibe. And they're selling different stuff versus their competitors.

BRAD SMITH: It is a different company from when you and I were in high school, and trying to go into these stores and got a whiff of the cologne that everybody was trying to figure out.

BRIAN SOZZI: I still like that cologne.

BRAD SMITH: You still like that cologne?

BRIAN SOZZI: I still like that cologne.

BRAD SMITH: OK, all right.

BRIAN SOZZI: It's great. It's called Fierce, just like you. Just like us.

BRAD SMITH: [LAUGHS] I didn't know the name of it but thank you. I'm gonna look it up from here.

BRIAN SOZZI: I told you, I wear-- I'm not making this stuff up. There's no fake news here. I wear the stuff. It's great.

BRAD SMITH: Well, here's the other thing about this store, too, and the story. You're gonna expect to see net store openings in 2022 remain roughly flat. Well, the square footage is gonna remain flat. Here is the thing that they want you to be able to take away from this.

And here's the difference in this Abercrombie & Fitch. The digital discovery actually decreases the dependency on gross square footage for them. So there you're taking a look at the number of stores that they would have year-over-year.

The number of stores has been decreasing-- or increasing, rather, strategically. But the square footage is what's been on the decline. And that's OK. It cuts down some of the overhead. It really leans into the amount of digital discovery.

We were just talking with one of our producers who placed a massive order, apparently. Even more so than they did in paying for their Harry Styles ticket.

BRIAN SOZZI: Yeah, that is a big order. And ultimately, a win for CEO Fran Horowitz, friend of our show, getting the job done. I'll also note this, too. A new chairmen coming into the board for Abercrombie & Fitch, also another friend of the show, Nigel Travis. Former CEO of Duncan Brands. He sits on several boards. He definitely knows what he's doing. I think he'll be a good chairman for the company.

JULIE HYMAN: At the same time, it's not like everything is fantastic.

BRIAN SOZZI: No, I mean--

JULIE HYMAN: The sales for the company are still gonna fall this year. They're gonna fall by the company-- by less than Abercrombie previously forecast, down 2% to 3% instead of a mid-single-digit drop. But none-- you know, like two out of three of these are negative numbers. So it's not like everything is going gangbusters. It's just that on a relative basis, if you look in the apparel world in particular, you know, this is a little bit stronger.

BRIAN SOZZI: I mean, Gap would kill-- Gap would kill for a 10% sales increase any of its brands. It just didn't happen. It doesn't happen.

JULIE HYMAN: Sure.