People walk past an Abercrombie & Fitch store on New York’s Fifth Avenue in 2022. (Photo by Michael M. Santiago/Getty Images)

Abercrombie keeps up the comeback with another billion-dollar quarter

Denim, dresses, and diversifying to wedding wear are driving growth, but investors are still "underwhelmed.”

Nia Warfield, Yiwen Lu

8/28/24 11:33AM

Retail’s biggest comeback story is stitching up even more gains: Abercrombie & Fitch reported record second-quarter revenue that beat Wall Street expectations and raised its sales outlook for the full year, despite an “increasingly uncertain environment.”

Sales for the quarter were $1.1 billion, marking A&F’s second billion-dollar quarter in a row. Operating income was $176 million, almost doubling last year’s $90 million, and net income more than doubled. Both the Abercrombie and Hollister brands saw double-digit sales growth in the second quarter, fueled by strong demand for denim and dresses during the summer and back-to-school season.

Despite all those numbers going up, the stock sank 15% after the retailer warned about increasing freight costs and slowing margin growth. Even with today’s decline, shares of A&F have been on a tear – they’re up 58% so far this year. That’s after soaring 285% in 2023 — more than the stock market’s all-star, Nvidia.

Adam Crisafulli, an analyst at Vital Knowledge, wrote in a note to clients that Abercrombie is held to a higher standard than most retailers because of its growth, and “people will probably be modestly underwhelmed” with the results.

Long known as a teen retailer, Abercrombie in recent years has started to diversify its offerings, sparking growth in both its men’s and women’s divisions. Since launching in March, A&F's wedding shop has exceeded expectations, with the company noting it has benefited as weddings turn into multi-day occasions. Last quarter, it added men's suits to the mix.

Abercrombie also expanded its partnership with the NFL to cover all 32 teams and is planning to launch a new range of fall essentials like sweaters, hats, and outerwear.

Abercrombie’s results come during a big week for retail earnings, which could offer more clues to consumer confidence. American Eagle, Birkenstock, and Ulta Beauty all report Thursday.

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American Airlines joins the flock, hiking bag fees amid higher jet fuel prices

American Airlines on Thursday announced that it, too, will be hiking the fees it charges customers to check luggage.

With the move, all four of the major US airlines, which together control about 80% of the US market, have now hiked their baggage fees in recent days amid surging jet fuel prices.

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

Since late March, JetBlue, Delta Air Lines, United Airlines, Canada’s WestJet, and Southwest have hiked their fees. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

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The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

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Less than a year after implementing them, Southwest is also hiking its bag fees

Southwest Airlines has joined the growing list of airlines opting to hike their bag fees amid sustained higher jet fuel costs.

Starting today, the first checked bag at the carrier — which implemented bag fees less than a year ago — will jump from $35 to $45, and the second from $45 to $55. Southwest quietly disclosed the change Tuesday.

Southwest assigned the decision to “part of an ongoing analysis of the business and against the evolving global backdrop.”

As of Wednesday, jet fuel prices dropped to $4.16 a gallon, per the Argus US Jet Fuel Index, down from $4.81 on Tuesday following President Trump’s ceasefire announcement, which sent travel stocks soaring. Major airlines have shed some of those gains in premarket trading Thursday.

With the move to hike bag fees, Southwest joins JetBlue, United Airlines, Delta Air Lines, and Canada’s WestJet, all of which also boosted fees this month. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

Three US airlines have already hiked baggage fees. More are likely on the way.