(Reuters) – Abercrombie & Fitch reported a surprise quarterly profit on Wednesday and raised its full-year sales forecast, the retailer betting on continued demand for its clothes and accessories despite the impact of inflation.
Abercrombie & Fitch shares jumped 20.6% in early trading on Wall Street.
The company has worked to improve inventory across its brands, attracting affluent U.S. customers to a diverse range of products as they return to social events and return to the office.
In the first quarter, the company’s inventory fell 20% from a year earlier to $448 million. In the fourth quarter, they were down 4%.
Abercrombie & Fitch reported a gross margin rate of 61%, up 570 basis points from a year earlier, helped by lower freight costs.
The group’s forecast contrasts with those of several consumer companies, such as Kohl’s, which have maintained their guidance for this year.
The company now expects net sales in 2023 to grow 2% to 4%, whereas it previously expected growth of 1% to 3%.
(Reporting Granth Vanaik in Bangalore; Nathan Vifflin, editing by Kate Entringer)
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