ANF - Abercrombie & Fitch Co. reports mixed Q4 earnings; initiates Q1 and FY23 outlook

• Abercrombie & Fitch Co. press release ( NYSE: ANF ): Q4 Non-GAAP EPS of $0.81 misses by $0.05 .
• Revenue of $1.2B (+3.4% Y/Y) beats by $20M .
• Inventories of $506 million, a decrease of approximately 4% over last year as we fully lapped the late receipts experienced in 2021 due to supply chain delays and significant production delays in Vietnam.
• For fiscal 2023, the company expects : Net sales growth in the range of 1 to 3%  vs. estimated growth of 0.87% Y/Y from $3.7 billion in 2022 with the expectation that Abercrombie will continue to outperform Hollister and the U.S. will continue to outperform International. We expect growth to be weighted to the second half of the year, driven primarily by the inclusion of a 53rd week for reporting purposes, along with net store expansion. The 53rd week is estimated to to add approximately $45 million to total net sales in 2023.
• Operating margin to be in a range of 4 to 5%.
• Effective tax rate to be in the mid-40s with continued inability to realize benefits on certain, expected tax losses incurred outside of the U.S.
• Capital expenditures of approximately $160 million.
• For the first quarter of fiscal 2023 , the company expects: Net sales to be around flat to fiscal first quarter 2022 level of $813 million vs. estimated decline of -2.09% Y/Y.
• Operating margin to be in the range of breakeven to 2% compared to (1)% in Q1 2022 period.
• Effective tax rate expected to be volatile in Q1 on expected low levels of income. We expect to incur tax expense regardless of level of taxable income or loss.

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