Abercrombie & Fitch (NYSE:ANF) shares surged more than 22% in early Wednesday trading after topping first-quarter earnings and revenue expectations.
The clothing retailer reported EPS of $0.39, $0.38 better than the analyst estimate of $0.01, while revenue for the quarter came in at $836 million versus the consensus estimate of $814.92 million.
The company's revenue hit a decade high for Q1, led by 14% growth from Abercrombie brands. Meanwhile, its gross profit rate rose 570 basis points over Q1 2022, driving operating margin above expectations.
ANF also reported that inventory levels fell 20% year-over-year due to its supply chain recovery and the return of chase capability.
Looking ahead, the company said it remains cautiously optimistic about consumer demand and its ability to react to a dynamic macro environment.
As a result of its positive first quarter performance, ANF now sees net sales growth for fiscal 2023 in the range of 2% to 4% from $3.7B in 2022. This is an increase to the previous outlook of up 1% to 3%. Operating margin is now expected to be between 5% and 6%, up from 4% to 5%.