Abercrombie & Fitch holiday sales hit by transportation delays

For the fourth quarter of fiscal 2021, Abercrombie & Fitch Co. expects net sales up in the range of 4 percent to 6 percent compared to 2020 net sales of 1.122 billion dollars and flat to down 2 percent compared to 2019 net sales of 1.185 billion dollars, reflecting ongoing U.S. and digital momentum.

The company said in a release that the prior outlook of up 3 percent to 5 percent to 2019 was impacted by additional unexpected and uncontrollable inventory receipt delays and increased Covid-related impacts and restrictions.

Commenting on the outlook, Fran Horowitz, the company’s chief executive officer, said: “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. 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.”

Abercrombie & Fitch expects FY21 net sales to rise between 19 to 20 percent

The company expects fourth quarter gross profit rate to be approximately flat to 2019 levels of 58.2 percent, in line with previous outlook, reflecting double-digit AUR improvement relative to 2019 and 2020 on reduced depth and breadth of promotions and markdowns, offset by approximately 75 million dollars of freight cost pressure, equating to roughly 650 basis points in gross profit rate, due to rising ocean and air rates and increased air deliveries related to Vietnam factory closures.

For fiscal 2021, the company expects net sales up in the range of 19 percent to 20 percent compared to 2020 net sales of 3.125 billion dollars and up 2 percent to 3 percent compared to 2019 net sales of 3.623 billion dollars.

The company expects, operating margin of 9 percent to 10 percent, in-line with previous outlook, compared with adjusted non-GAAP operating margins of 1.7 percent and 2.3 percent in fiscal 2020 and fiscal 2019, respectively.