Welcome back 90s clothing favs — baggy cargo pants and cream colors — to a local Abercrombie & Fitch store (and several of its rivals) this holiday season.
"The 90s is the biggest influence that is happening out there for our consumer today," said Abercrombie & Fitch CEO Fran Horowitz on Yahoo Finance Live.
Rejoice aging millennials.
The 90s-theme attire did its part to power Abercrombie & Fitch to a better than expected third quarter this week. Third quarter sales rose 10% from a year ago, led by a 17% increase in the U.S. Sales in Europe and Asia fell 6% and 12%, respectively, as each country continued to battle through the COVID-19 pandemic.
Here is how Abercrombie & Fitch performed compared to Wall Street estimates:
Net Sales: $905.2 million vs. $899.4 million
Gross Margin: 63.7% vs. 63.6%
Diluted EPS: $0.86 vs. $0.67
Abercrombie shares (ANF) dropped 14% on Tuesday's session as the company issued cautious margin guidance for the fourth quarter due to supply chain bottlenecks hampering the apparel industry. Shares lost another 5% on Wednesday to $39, weighed down by a disastrous earnings report from apparel competitor Gap.
The Street mostly stayed upbeat on the stock, however, citing the strength in Abercrombie's sales in a competitive young adult apparel market.
"We are encouraged by signs of sustained domestic brand momentum and ongoing rationalizing of the store footprint. We believe that Abercrombie can retain a significant portion of the gross margin gains it has seen during COVID and that the market underestimates occupancy reductions," said Jefferies retail analyst Janine Stichter.
Stichter maintained a Buy rating on Abercrombie's stock with a $61 price target. At current trading levels, the price target assumes upside potential of 56%.