Abercrombie and Lululemon report early holiday results

Abercrombie and Fitch, Lululemon and American Eagle Outfitters all raised their fiscal fourth-quarter outlooks Monday, saying they drew customers looking for holiday gifts and items for themselves in November and December.

Yet Wall Street greeted the news with varying levels of enthusiasm Monday morning. Shares of Abercrombie and Amercian Eagle shot up about 7%. And Lululemon sank by more than 1%, after investors weighed the slight forecast tweak with concerns that the athletic apparel retailer may face tougher competition in the months ahead.

The companies shared the latest quarterly forecasts ahead of meetings with investors and analysts at the ICR Conference this week in Orlando. Other retailers are also expected to release holiday updates during the three-day event.

So far, holiday spending estimates have struck a positive note. Online sales rose 4.9% year over year to $222.1 billion in November and December, according to Adobe Analytics. Retail sales during the holiday season, excluding automotive sales, grew 3.1% in the U.S. year over year, according to preliminary data from Mastercard SpendingPulse, which tracks in-store and online retail sales across all types of payment.

Yet it’s still unclear which retailers captured more of those dollars spent by holiday shoppers.

American Eagle looks like a winner. It said quarter-to-date revenue is up by about 8% as of Dec. 30, with its namesake brand’s sales increasing by the high single-digits and Aerie increasing by the low teens. It said it expects both revenue and operating profit to be better than expected for the fiscal fourth-quarter.

The company said fiscal fourth-quarter revenue will be up low double digits and operating profit is expected to be about $130 million, compared with previous guidance of $105 million to $115 million.

American Eagle CEO Jay Schottenstein said in a news release that the retailer’s momentum “has continued into early January.”

Mall rival Abercrombie said it expects net sales to increase in the mid-teens and its operating margin to come in around 15% for the fiscal fourth quarter. That compares to its previous expectations for net sales to grow by low double-digits and operating margin to be in the range of 12% to 14%. It hiked its fiscal full year results to correspond.

In a news release, Abercrombie CEO Fran Horowitz said the women’s business for Abercrombie & Fitch is expected to hit highest-ever fourth quarter sales. Plus, she said, its men’s business has grown and its Hollister brand is on track for year-over-year growth and higher profits as the company offers better merchandise and manages its inventory sharply.

Lululemon gave more modest tweaks to its fourth-quarter forecast. It said it expects net revenue to be in the range of $3.17 billion to $3.19 billion for the fourth quarter. It previously anticipated a range of $3.135 billion to $3.17 billion. Diluted earnings per share are also expected to come in at a higher level — in the range of $4.96 to $5.00 for the quarter, compared with the previous range of $4.85 to $4.93.

Retail earnings season kicks off in mid-February, with names like Walmart, Target and Home Depot. Abercrombie, American Eagle and Lululemon are expected to report full holiday results in March.

Abercrombie and Fitch, Lululemon and American Eagle Outfitters all raised their fiscal fourth-quarter outlooks Monday, saying they drew customers looking for holiday gifts and items for themselves in November and December.

Yet Wall Street greeted the news with varying levels of enthusiasm Monday morning. Shares of Abercrombie and Amercian Eagle shot up about 7%. And Lululemon sank by more than 1%, after investors weighed the slight forecast tweak with concerns that the athletic apparel retailer may face tougher competition in the months ahead.

The companies shared the latest quarterly forecasts ahead of meetings with investors and analysts at the ICR Conference this week in Orlando. Other retailers are also expected to release holiday updates during the three-day event.

So far, holiday spending estimates have struck a positive note. Online sales rose 4.9% year over year to $222.1 billion in November and December, according to Adobe Analytics. Retail sales during the holiday season, excluding automotive sales, grew 3.1% in the U.S. year over year, according to preliminary data from Mastercard SpendingPulse, which tracks in-store and online retail sales across all types of payment.

Yet it’s still unclear which retailers captured more of those dollars spent by holiday shoppers.

American Eagle looks like a winner. It said quarter-to-date revenue is up by about 8% as of Dec. 30, with its namesake brand’s sales increasing by the high single-digits and Aerie increasing by the low teens. It said it expects both revenue and operating profit to be better than expected for the fiscal fourth-quarter.

The company said fiscal fourth-quarter revenue will be up low double digits and operating profit is expected to be about $130 million, compared with previous guidance of $105 million to $115 million.

American Eagle CEO Jay Schottenstein said in a news release that the retailer’s momentum “has continued into early January.”

Mall rival Abercrombie said it expects net sales to increase in the mid-teens and its operating margin to come in around 15% for the fiscal fourth quarter. That compares to its previous expectations for net sales to grow by low double-digits and operating margin to be in the range of 12% to 14%. It hiked its fiscal full year results to correspond.

In a news release, Abercrombie CEO Fran Horowitz said the women’s business for Abercrombie & Fitch is expected to hit highest-ever fourth quarter sales. Plus, she said, its men’s business has grown and its Hollister brand is on track for year-over-year growth and higher profits as the company offers better merchandise and manages its inventory sharply.

Lululemon gave more modest tweaks to its fourth-quarter forecast. It said it expects net revenue to be in the range of $3.17 billion to $3.19 billion for the fourth quarter. It previously anticipated a range of $3.135 billion to $3.17 billion. Diluted earnings per share are also expected to come in at a higher level — in the range of $4.96 to $5.00 for the quarter, compared with the previous range of $4.85 to $4.93.

Retail earnings season kicks off in mid-February, with names like Walmart, Target and Home Depot. Abercrombie, American Eagle and Lululemon are expected to report full holiday results in March.