Despite getting buffeted by COVID-19's economic damage along with the rest of the retail sector, apparel company Abercrombie & Fitch (NYSE: ANF) lost less ground during the second quarter than expected, trouncing analyst estimates in both revenue and earnings per share (EPS). While sales were still down by 17% overall, the enterprise managed to generate earnings per share, far outperforming Q2 2019's loss.
Abercrombie & Fitch overshot analyst consensus massively, according to Reuters. Analysts expected an $0.83 loss per share for Q2 2020, but adjusted EPS actually clocked in at a positive $0.23, beating by $1.06. The 13 analysts polled also predicted $658.44 million in net sales for the period. While the actual revenue reported, $698 million, is down 17% year over year, it was still a positive surprise of 6%.
Earnings per share made remarkable gains year over year, from a $0.48 loss per share to this year's $0.23 in earnings. The jump is partly explained by 2019's "flagship store exit charges" of $0.50 per share.
Abercrombie's efforts to sharply reduce costs earlier in the quarter seem to have paid off. The company said it would slash expenses by $200 million, reducing salary expenditures and skipping dividends. Adjusted operating expense as a percentage of sales fell by 610 basis points.
An actively managed e-commerce push also helped the bottom line. "We were able to grow our highly penetrated digital revenue base by 56% year-over-year to $386 million," CEO Fran Horowitz said in a statement.
The company said it expects a similar performance, including a 15% to 20% year-over-year sales drop, for the third quarter. Abercrombie's stock value has rocketed upward more than 15% in today's trading.
10 stocks we like better than Abercrombie & Fitch
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Abercrombie & Fitch wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of August 1, 2020
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.