Lululemon, Abercrombie, American Eagle release holiday sales in early 2024

ORLANDO, Fla. — Big-name retailers posted much better-than-expected early holiday results on Monday, but their shares fell as Wall Street failed to impress.

Lululemon, Abercrombie & Fitch and American eagle raised its fourth-quarter guidance on Monday after seeing a strong response from shoppers during the all-important holiday season. Urban Outfitters there was also a strong increase in public holidays but Macy’s said his key quarter was going worse than he expected.

Still, shares of all those companies fell early Monday, with many down more than 5%. Abercrombie shares fell the most, down about 17%, as investors wonder its rapid growth is coming to an end.

Lululemon now expects sales to rise 11% to 12% to $3.56 billion to $3.58 billion, compared to a prior range of $3.48 billion to $3.51 billion.

Excluding the extra fiscal week the company will have in the fourth quarter of 2024, Lululemon expects sales growth to be between 6% and 7%.

The company also raised its profit forecast. Lululemon now forecasts fourth-quarter earnings per share to be between $5.81 and $5.85, down from its previous estimate of between $5.56 and $5.64. It expects gross margins to rise 0.3 percentage points, after previously forecasting a decline of 0.2 to 0.3 percentage points.

“During the holiday season, our guests responded well to our product offering, which allowed us to increase our guidance for the fourth quarter,” Chief Financial Officer Megan Frank said in a statement.

Meanwhile, Abercrombie is also expecting a slightly better-than-expected holiday quarter. The apparel company pushed its net sales growth forecast to a range of 7% to 8%, compared with previous forecasts of 5% to 7%.

Abercrombie now expects full-year sales to grow 15%. Previously, sales were expected to grow by 14-15% during this period.

The forecast is a far cry from the hits Abercrombie posted last year, when holiday sales jumped a staggering 21% year-on-year.

Investors who are bullish on Abercrombie would say it makes sense to see the company’s growth begin to slow as it matures and year-over-year comparisons tougher, but after roughly two years of a bullish run for the stock, some may turn bearish.

Still, Abercrombie’s full-year sales forecast is close to what it posted last year, when revenue rose 16%.

In a press release, Abercrombie CEO Fran Horowitz made it clear that moving forward, the company will be more focused on growing profits than sales as it seeks to “enhance long-term shareholder value.”

“Following an anticipated two years of double-digit revenue and profit growth, I am more confident than ever in the strength of our brands and operating model as we move forward, sustaining the outstanding opportunities we have created,” Horowitz said. . “In 2025, we will aim to continue sustainable, profitable growth by executing on our guidance to win and retain customers around the world. Our goal is to use our healthy margin structure and balance sheet to grow operating income dollars and earnings per share at a faster pace than sales.”

Retailers released their guidance ahead of the annual ICR conference in Orlando, when some of the biggest US retailers are expected to report early 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 is known to set the tone for consumer deals and retail performance early in the year.

Macy’s, which is expected to speak at the conference, also reported early results, but didn’t have good news to share like some of its rivals. The department store now expects sales to be at or slightly below its previous range of $7.8 billion to $8.0 billion. Its shares fell more than 6% in early trading.

Urban Outfitters also reported early holiday results and reported net sales for the two months ended Dec. 31 were up 10% year-over-year. Comparable retail sales rose 6%, driven by strong online sales.

Urban’s namesake banner saw comparable sales fall 4% as the chain continued to lag behind Anthropologie and Free People, which saw comparable sales rise 10% and 9%, respectively.

At the same time, sales of Urban’s rental service Nuuly grew by 55% thanks to a 53% increase in the number of active subscribers.

At the beginning of trading, shares fell by almost 5%.

American Eagle also raised its outlook for the fourth quarter and said it expects operating income of about $135 million, down from previous forecasts of $125 million. It said comparable sales for the quarter to January 4 rose in the low single digits, compared with a previous forecast of 1%.

Shares fell about 4% in early trading.

Overall, the holiday shopping season was not expected to lead to the dramatic outbursts that have become common since the Covid-19 pandemic. The National Retail Federation said it expects sales to rise between 2.5% and 3.5%. If inflation is taken into account, there was real growth is expected to be minimal.

However, some early readings indicate that the holiday season may be on a little better than expected.

U.S. holiday season retail sales, excluding auto sales, grew by 3.8% year-on-year between Nov. 1 and Dec. 24, according to Mastercard SpendingPulse, which measures in-store and online sales by various payment types.