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ORLANDO, Fla. – Big-name retailers posted better-than-expected results at the start of the holiday season on Monday, but their shares fell as Wall Street came out unimpressed.
Lululemon, Abercrombie & Fitch and American eagle On Monday, they raised their fourth-quarter forecasts after seeing a strong response from shoppers during the key holiday season. Urban Outfitters It also saw significant holiday growth, though Macy’s she said her trimester was going worse than she expected.
However, shares of all those companies fell early Monday, with many down more than 5%. Abercrombie shares were the biggest losers, down about 20%, as investors wonder its rapid growth it’s about to end
Lululemon now expects sales to grow 11% to 12% to $3.56 billion to $3.58 billion, up from $3.48 billion to $3.51 billion previously.
Excluding the company’s extra fiscal week in the fourth quarter of 2024, Lululemon expects sales growth of 6% to 7%.
The company also raised its earnings forecasts. Lululemon now expects fourth-quarter earnings per share to be between $5.81 and $5.85, compared to its previous guidance of $5.56 to $5.64. It expects gross margin to grow by 0.3 percentage points, after previously forecasting a decline of between 0.2 and 0.3 percentage points.
“During the holiday season, our guests responded well to our product offerings, and we were able to increase our fourth quarter guidance,” Chief Financial Officer Meghan Frank said in a statement.
Meanwhile, Abercrombie also expects its holiday quarter to be slightly better than expected. The apparel company raised its sales growth forecast to a range of 7% to 8%, compared to previous guidance of 5% to 7%.
Abercrombie expects full-year sales to grow 15%. It had previously expected sales to rise between 14% and 15% for the period.
The outlook is a far cry from the blockbuster numbers Abercrombie posted last year, with holiday sales up a whopping 21% year-over-year.
Investors bullish on Abercrombie might say it makes sense to start making tougher year-over-year comparisons as the company’s growth slows, but after nearly two years of explosive stock growth, some may turn bearish.
However, Abercrombie’s full-year sales guidance is close to what it set last year, when revenue grew 16%.
In a news release, Abercrombie CEO Fran Horowitz stated that going forward, the company will be focused on increasing profits rather than sales because it “drives long-term shareholder value.”
“After two years of double-digit and below-expected growth, I am as confident as ever in the power of our brands and operating model as we move forward, supported by the outstanding capabilities we have built,” said Horowitz. . “In 2025, we will seek to continue sustainable and profitable growth through the execution of our books to win and retain customers worldwide. Our goal is to leverage our healthy margin structure and balance sheet to grow operating income dollars and earnings per share at faster rates than sales.”
Retailers released their guidance ahead of the annual ICR conference in Orlando, when some of the top US retailers are expected to announce holiday results and meet with investors and analysts about their performance. The conference brings together Wall Street’s biggest banks, law firms, private equity firms and investors, and sets the tone for consumer deal-making and retailer performance earlier this year.
Macy’s, which is expected to present at the conference, also released early results, but didn’t have as much good news to share as some of its competitors. It now expects sales to be in the range of $7.8 billion to $8 billion, or slightly below the previously issued range. Its shares fell more than 6% in intraday trading.
Urban Outfitters also released holiday results and reported a 10% increase in net sales for the two months ended December 31 compared to the year-ago period. Comparable retail segment sales rose 6%, driven by strong online sales.
Comparable sales at Urban’s namesake banner fell 4% as the chain continued to underperform Anthropologie and Free People, where comparable sales grew 10% and 9%, respectively.
Meanwhile, sales at Urban’s rental service Nuuly increased by 55%, driven by a 53% increase in average active subscribers.
Shares are down more than 6% in intraday trading.
American Eagle also raised its outlook for the fourth quarter, saying it expects operating profit of about $135 million, up from $125 million previously. It said comparable sales for the quarter to January 4 grew in low single digits, up 1% from previous guidance.
Revenue, however, will fall about 5% due to American Eagle’s fiscal calendar, which will be one week shorter than the year-ago period, the company said. The shift in timing will result in $85 million in fourth-quarter sales and $60 million for the full year.
Shares fell about 4%.
Overall, the holiday shopping season was not expected to produce the explosive numbers that have become common after the Covid-19 pandemic. The National Retail Federation said it expected sales to grow in the meantime 2.5% and 3.5%. When inflation is taken into account, it was real growth is expected to be minimal.
However, some initial readings have indicated that the holiday season may be a a little better than expected
US holiday retail sales, excluding auto sales, it increased by 3.8% per year From Nov. 1 to Dec. 24, according to Mastercard SpendingPulse, which measures in-store and online sales across all payment types.
