Abercrombie & Fitch (NYSE: ANF) reported Q2 EPS of $1.10, $0.94 better than the analyst estimate of $0.16. Revenue for the quarter came in at $935 million versus the consensus estimate of $839.06 million.

Fiscal 2023 Full Year Outlook

The following outlook replaces all previous full year guidance. For fiscal 2023, the company now expects:

• Net sales growth of around 10% from $3.7 billion in 2022. This is an increase to the previous outlook of up 2% to 4%. The current outlook assumes that Abercrombie brands will continue to outperform Hollister brands. Also, fiscal 2023 includes a 53rd week for reporting purposes, along with net store expansion. The 53rd week is estimated to add approximately $45 million to total net sales in the fourth quarter and full year of 2023.
• Operating margin to be in the range of 8% to 9%. This range improves from the previous outlook of 5% to 6%. The current outlook includes a benefit of around 250 basis points from full year 2022 levels on expected net improvement in freight and raw material costs, and modest operating expense leverage with sales growth expected to more than offset higher expenses from the combination of inflation and increased investments for the 2025 Always Forward Plan initiatives, including an upgrade of our retail merchandising ERP system.
• Effective tax rate to be in the low-to-mid 30s. This replaces the previous outlook of high-30s. The current outlook assumes the continued inability to realize benefits on certain expected tax losses incurred outside of the U.S., although to a lesser extent than the prior outlook provided.
• Capital expenditures of approximately $160 million.

Fiscal 2023 Third Quarter Outlook

For the third quarter of fiscal 2023, the company expects:

• Net sales growth to be up low double-digits compared to fiscal third quarter 2022 level of $880 million. Included in this outlook is the expected benefit of approximately 140 basis points from foreign currency.
• Operating margin to be in the range of 8% to 10% compared to an adjusted operating margin of 2.4% in Q3 2022. We expect the year-over-year improvement to be driven by a higher gross profit rate on lower freight costs and higher AURs and modest operating expense leverage on higher sales.
• Effective tax rate to be in the mid-30s. This outlook assumes the continued inability to realize benefits on certain expected tax losses incurred outside of the U.S.

For earnings history and earnings-related data on Abercrombie & Fitch (ANF) click here.