Online sales an 'important driver' for Abercrombie as it posts revenue of US$730m

Abercrombie & Fitch Co. has posted a net sales of US$730,899,000 for the first quarter of its financial year ended 5 May 2018 (Q1 2018), compared to US$661,099,000 during the same period last year.

Meanwhile, the company's marketing, general and administrative expenses amounted to approximately US$124,897,000 in Q1 2018, compared to US$109,893,000 in Q1 2017. According to CEO Fran Horowitz during an investors call, the company is "off to a strong start" this year and is pleased with its performance across all brands - Abercrombie & Fitch, Abercrombie Kids and Hollister Co.

She said that more than two-thirds of its digital traffic comes from mobile, with 17% coming from its app, which has been its fastest growing platform. Horowitz described online sales to be an "important driver" for its business as customers are increasingly starting their shopping journey online.

"We are well-positioned to capitalise on this trend and continue to invest to enhance our omni-channel capabilities to roll them out globally," she said. Horowitz added that the company is "very happy" with its marketing execution in Q1 2018. As its marketing efforts become increasingly integrated and continue to drive consumer engagements, Abercrombie plans to fuel its efforts with higher spend.

Additionally, it has also made progress in its loyalty programme, seeing a growth of customer accounts to approximately 17 million across the brands. Horowitz said that loyalty card members spend more and at higher frequency.

"Our loyalty programmes provide valuable data and insights that enable us to direct special attention to our most valuable paid customers, and explore how to harness their engagement with exclusive products and experiences," she said.

The company will also continue to focus on aligning product, voice and customer experience, which it believes will help drive traffic and sales conversions. Hollister witnessed another "strong quarter" of growth, Horowitz said, and this is driven by continued strength in Asia and North America.

The brand currently has 144 stores worldwide and 394 in the US, and continues to place strategic focus on its "Must Win" categories, which are core categories that drive business and that the brand is known for - graphic t-shirts, outerwear and jeans. Meanwhile, Hollister is also devoting attention to its "Must Grow" categories which include swim and underwear. These categories account for more than two-thirds of Hollister sales, with growth driven by record first quarter sales in denim and swim, and another strong quarter in graphic t-shirts and outerwear, Horowitz said.

"Hollister's marketing campaign execution this is the best it has ever been," she said, adding that the brand has seen 1.5 billion impressions across all platforms for its "Carpe Now' campaign, and more than 78 million engagements with its content in Q1 2018.

On the Abercrombie & Fitch front, the company witnessed strong performance in Asia and is also focused on "Must Win" categories such as outwear, jeans, pants and fleece. It is also focusing efforts on "Must Grow" categories, including t-shirts, swim and dresses, Horowitz said.

COO Joanne Crevoiserat added that the company will create new customer experiences in 2018. Due to the strong digital growth and penetration, Abercrombie now has pop-in, order in store and ship from store options in approximately half of the 20 countries it operates in.

"The expansion of these capabilities has helped drive engagement, as we are seeing a double-digit growth in pop-ins and order in store. We are focused on delivering the best omni-channel experience in the most efficient manner," she said.