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ORLANDO, Fla. – Major retailers posted largely better-than-expected holiday results on Monday, but their shares fell as Wall Street was unimpressed.
Lululemon, Abercrombie & Fitch and American Eagle raised its fourth-quarter outlook on Monday after seeing a strong response from shoppers during the all-important holiday season. Urban Outfitters also saw a strong increase in holidays, but Macy’s he said his fourth key went worse than he had anticipated.
However, shares of all these companies traded lower earlier Monday, and many fell by more than 5%. Abercrombie shares fell the most, down about 20%, as investors wondered whether its rapid growth has come to an end.
Lululemon now expects sales to grow between 11% and 12% to between $3.56 billion and $3.58 billion, from a previous range of $3.48 billion and $3.51 billion.
Excluding an additional fiscal week that the company will have in the fourth quarter of 2024, Lululemon expects sales growth between 6% and 7%.
The company also raised its profit outlook. Lululemon now forecasts fourth-quarter earnings per share to be between $5.81 and $5.85, compared with previous guidance of between $5.56 and $5.64. Gross margins are expected to increase by 0.3 percentage points after earlier forecasts that they would decrease between 0.2 and 0.3 percentage points.
“During the holiday season, our guests responded well to our product offering, allowing us 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 net sales growth outlook to a range of between 7% and 8%, compared with a previous guidance of between 5% and 7%.
Abercrombie now expects full-year sales to grow 15%. It previously expected sales to increase between 14% and 15% for the period.
The outlook is a far cry from the blockbuster numbers Abercrombie posted last year, when holiday sales jumped a staggering 21% compared to the year-ago period.
Bullish investors on Abercrombie say it makes sense to see the company’s growth begin to slow as it matures and returns tougher year-over-year comparisons, but after nearly two years of explosive stock growth, some might be back down.
However, Abercrombie’s full-year sales guidance is close to what it posted last year, when revenue grew 16%.
In a press release, Abercrombie CEO Fran Horowitz indicated that going forward, the company will be more focused on increasing profits than sales as it looks to “drive shareholder value long term”.
“After two projected years of double-digit top- and bottom-line growth, I am as confident as ever in the strength of our brands and operating model as we move forward, supported by the exceptional capabilities we have built,” Horowitz said. . “In 2025, we will seek to continue sustainable and profitable growth through the execution of our playbooks to win and keep customers worldwide. Our goal is to leverage our healthy margin structure and budget to grow cash from operating income and earnings per share to 2025. faster sales rates.”
Retailers published their guidance ahead of the annual ICR conference in Orlando, when some of the most prominent American retailers are expected to announce the first holiday results and meet with investors and analysts on their performance. The conference brings together Wall Street’s biggest banks, law firms, private equity firms and investors, and is known for setting the tone for consumer business and retailer performance at the start of the year
Macy’s, which is expected to present at the conference, also published early results, but did not have as good news to share as some of its competitors. The warehouse department now expects sales to be at, or slightly below, its previously issued range of between $7.8 billion and $8.0 billion. Its shares fell more than 6% in intraday trading.
Urban Outfitters also released early holiday results and said net sales for the two months ended Dec. 31 were up 10% compared to the year-ago period. Comparable segment sales increased 6%, driven by strong online sales.
Urban’s namesake banner saw comparable sales fall 4% as the chain continued to underperform Anthropologie and Free People, where comparable sales grew 10% and 9%, respectively.
Meanwhile, sales grew by 55% at Urban Nuuly’s rental service, driven by a 53% increase in average active subscribers.
Shares fell more than 6% in intraday trading.
American Eagle also raised its fourth-quarter outlook, and said it expects operating profit of about $135 million, up from its previous guidance of $125 million. It said comparable sales for the quarter to January 4 rose by a low number, compared with previous guidance of 1%.
Total revenue, however, will be down about 5% due to American Eagle’s fiscal calendar, which will have one week less than the year-over-year period, the company said. The change in timing is expected to impact sales by $85 million during the fourth quarter and $60 million for the full year.
Shares fell about 4%.
In general, the holiday shopping season was not expected to produce the numbers of explosions that have become common after the Covid-19 pandemic. The National Retail Federation said it expected sales to grow between 2.5% and 3.5%. When inflation is taken into account, the real growth was expected to be minimal.
However, some early readings have indicated that the holiday season may be a a little better than expected.
Retail sales for the holiday season in the United States, excluding auto sales, increased 3.8% year on year between November 1 and December 24, according to Mastercard SpendingPulse, which measures in-store and online sales across payment types.
