Abercrombie & Fitch Co. (NYSE:ANF) Q2 2023 Earnings Call Transcript

Janet Kloppenburg: And Scott, could you comment on Hollister’s back-to-school trends? I know you said A&F has sustained momentum. What have you said about Hollister in the third quarter to-date?

Scott Lipesky: Same thing, seeing that nice momentum coming off of June into July, into August. So part of the reason we can take up that outlook here for Q3 and the full year is seeing that Hollister inflection and believing here in the second-half.

Janet Kloppenburg: And that’s globally, right? You’re seeing momentum improve?

Scott Lipesky: Yes.

Janet Kloppenburg: Thank you so much. Have a good day.

Fran Horowitz: Thanks, Janet. You too.

Operator: [Operator Instructions] Our next question comes from Alex Straton with Morgan Stanley. Your line is open.

Alex Straton: Great. Hi, Fran and Scott, congrats on another great quarter. Can you guys just give us a sense perhaps for where the operating margin sits for the two brands right now, compared to history? And if not that, in aggregate, maybe just any color on how we should think about the difference between the two and the opportunity from here, particularly at Hollister? Thanks a lot.

Scott Lipesky: Sure, Alex. I’ll grab that one. We don’t publish operating margins by brand. But what I would say is the operating margin for Abercrombie is higher than Hollister. We’ve talked a lot over the past couple of years about our digital business, having a higher operating margin than our store business. And with Abercrombie being much more tilted towards digital that gives that brand a nice edge on operating margins. But we’re really pleased about what we’re seeing across brands in terms of operating margin. Obviously, taking the outlook up for the year to 8% to 9%, and that’s helped from across brands and seeing that cost come in on the product side with freight coming in and hopefully cotton next, that benefits us across brands.

And Fran also talked about store business being solid across the brands and seeing that store business in Hollister, where we have a very high penetration. That’s a good thing to help that operating margin for the Hollister brand also. So we feel good with where we’re sitting today and optimistic here for the back half.

Alex Straton: Thanks a lot. Congrats.

Operator: I show no further questions at this time. I would now like to turn the call back to Fran for closing remarks.

Fran Horowitz: I just want to thank everyone for joining the call today, and we look forward to providing more updates to all of you soon. Thank you.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.