Abercrombie & Fitch experiences record-breaking sales growth of 22% in the first quarter.

• Abercrombie & Fitch's winning streak is still on fire.
• The apparel retailer exceeded expectations with a 22% increase in sales during the first quarter.
• The company, which also operates under the Hollister brand, has undergone a significant transformation over the past decade, drastically changing its image from its 2000s reputation.

On Wednesday, it was reported that the company had its strongest first quarter in its history, surpassing expectations once again.

While profits were nearly seven times higher and came in well ahead of Wall Street's estimates, the retailer's sales jumped 22% compared to last year.

Shares were up about flat in premarket trading.

Based on a survey of analysts by LSEG, how did the apparel company perform in its first fiscal quarter compared to Wall Street's expectations?

• Earnings per share: $2.14 vs. $1.74 expected
• Revenue: $1.02 billion vs. $963.3 million expected

In the three-month period ending May 4, the company's net income was $113.9 million, or $2.14 per share, which is a significant increase from the previous year's $16.6 million, or 32 cents a share.

The increase in sales from $836 million to $1.02 billion was approximately 22%.

"Fran Horowitz, CEO, stated in a news release that the company successfully navigated seasonal transitions with relevant assortments and compelling marketing, leveraging agile chase capabilities and inventory discipline, resulting in sales above expectations. Growth was broad-based across regions and brands, with Abercrombie brands achieving 31% growth and Hollister brands delivering 12% growth."

Despite facing tough comparisons in 2024, Abercrombie is leveraging its double-digit sales growth from 2023 to continue its success in retail.

In the current fiscal year, Abercrombie expects sales to increase again, and has raised its revenue guidance.

The retailer now anticipates a 10% increase in sales for the full year, which is higher than the previous forecast of 4% to 6%, as per LSEG.

According to LSEG, Abercrombie expects sales to increase by a mid-teens percentage in the current quarter, surpassing estimates of a 9% increase.

Horowitz intends to expand the company's success by enhancing its Hollister brand, which generates approximately half of its total sales, and introducing additional categories under its flagship brand. In March, the retailer launched the "A&F Wedding Shop" - a collection of apparel suitable for brides and guests that can be used not only for the wedding day but also for other wedding events, such as bachelorette parties and rehearsals.

The collection comprises a variety of items such as dresses, bikinis, pajamas, skirts, and others, priced between $80 and $150. The mid-tier pricing strategy of Abercrombie appeals to value-conscious consumers and provides the company with a competitive edge in the bridal wear market, which is projected to reach $83.5 billion in the U.S. by 2030, according to ResearchAndMarkets.com.

In the past six years, Abercrombie has shifted its focus from being an exclusive retailer with bold branding and shirtless models to a company that emphasizes inclusivity and caters to the working millennial demographic.

The company's transformation, which has been in the works for years, started to show results in 2023 with a 16% annual sales increase, despite the U.S. apparel market shrinking. Its stock has soared 285% in 2023 and is up another 73% as of Tuesday's close, surpassing the S&P 500's gains of 11%.

Read the full earnings release here.