ANF Shares Up 8% as Abercrombie & Fitch Publishes Profitable Q2 Report

The shares of popular clothing retailer Abercrombie & Fitch Co (NYSE: ANF) has surged more than 8% following the report of a profitable second quarter. The profitability of the firm amid the coronavirus pandemic has been attributed to the effective cost-cutting strategy implemented by the firm during this period.

Abercrombie joins other retailers including Amazon.com Inc (NASDAQ: AMZN) and Walmart Inc (NYSE: WMT) among others who have profited from the online sales boom ushered in by the coronavirus pandemic. Despite Abercrombie and Fitch’s sales been down, the company saw increased revenues and profits to complement.

ANF shares shot up by 8.09% on Thursday, adding 90 cents to close at $12.03. The shares continued this rally in the pre-market adding another 27 cents to cap at $12.30.

By Numbers: Why ANF Shares Got Boosted

From the quarterly report released on Thursday, Abercrombie & Fitch reported impressive online revenue growth of 56% despite the ravaging impacts of the coronavirus pandemic.

The clothing retailer also reported a net income of $5.5 million during its fiscal second-quarter which ended Aug. 1. This amounts to about 9 cents per share, compared with a loss of $31.1 million, or 48 cents a share, a year ago.

Stunning Wall Street analysts, the company reported the drop in its net sales from $841.1 million in the same quarter in 2019 to $698.3 million as against a benchmark expectation of $658.44 million.

In addition, the company earned 23 cents per share as against the expected loss of 83 cents analysts projected.

Abercrombie’s Strategy to Turn Profitable Quarter

As noted, the company employed a robust cost-cutting strategy that affects every aspect of its operations. With sales happening digital, Abercrombie & Fitch Chief Financial Officer Scott Lipesky noted that “As long as you can reduce fixed costs, this shift to digital can be profitable,” he said speaking to CNBC.

During the pandemic, the firm adjusted the working hours of its store employees to bolster its online operations. “We thought it would take a little bit longer to get here,” Lipesky added, but the pandemic has accelerated these adjustments.

Moving forward, the firm has acknowledged that the Back-to-school sales may drag into October, a situation the company’s executives noted can rub on on major upcoming holidays.

The firm’s store and distribution expenses were down almost 18% in the second quarter, while marketing costs were down 16%.

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