Abercrombie pins lacklustre Holiday sales outlook on supply chain hurdles
U.S. apparel retailer Abercrombie & Fitch on Monday updated its fourth-quarter and fiscal 2021 sales outlook, citing supply chain hurdles and the spread of the Omicron variant for lacklustre Holiday period sales.
The New Albany, Ohio-based company said it now expects fourth-quarter net sales to be up in the range of 4% to 6%, compared to 2020 net sales of $1.122 billion and flat to down 2% compared to 2019 net sales of $1.185 billion. Abercrombie's prior outlook of up 3% to 5% to 2019 was impacted by additional unexpected and uncontrollable inventory receipt delays and increased Covid-related impacts and restrictions during the all-important Holiday season, where consumer demand was high, but stock availability was scarce on supply chain issues.
"After a strong start to the quarter in inventory receipts and product sell-through, we experienced unexpected inventory receipt slides in key categories due to extended port and transportation delays," said Fran Horowitz, chief executive officer, Abercrombie & Fitch.
"As a result, we did not have enough inventory to keep pace with customer demand, resulting in lost sales during the peak holiday selling period. While all brands were impacted, Hollister and Gilly Hicks were slightly harder hit. We believe that, if we had the inventory on-hand, we would have delivered sales within our previous outlook range. Post-holiday, as inventory has landed, we have experienced an acceleration in sales trend. Looking ahead, we expect to minimize the gross margin impact of late deliveries by balancing promotional depth and utilizing pack-and-hold where appropriate."
For fiscal 2021, net sales are expected to be up between 19% and 20%, compared to 2020 net sales of $3.125 billion and up 2% to 3% compared to 2019 net sales of $3.623 billion. Abercrombie also predicts full-year operating margin of 9% to 10%, in-line with its previous outlook, compared with adjusted non-GAAP operating margins of 1.7% and 2.3% in fiscal 2020 and fiscal 2019, respectively.
“I am incredibly proud of how our global teams and partners have continued to execute in the face of ongoing Covid-related disruptions, putting us on track to achieve our highest annual operating income and margin in over a decade," concluded Horowitz.
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