After experiencing better-than-expected holiday sales, Lululemon and Abercrombie have increased their sales guidance.

• Lululemon revised its fourth quarter earnings and revenue forecast following a cautious approach prior to the holiday shopping season.
• Although Abercrombie & Fitch slightly increased its guidance, shares fell.
• Despite early expectations, the holiday shopping season did not meet the blowout seen in previous years, but it was better than anticipated.

On Monday, Orlando, Fla. announced an improvement in their fourth quarter outlooks following a positive shopping response during the holiday season.

Lululemon's new outlook was well-received by investors, causing shares to increase by approximately 3% in premarket trading. However, Abercrombie shares fell by about 8%, leaving investors questioning whether its rapid growth will continue.

Lululemon has revised its sales growth forecast to between 11% and 12%, with projected revenue ranging from $3.56 billion to $3.58 billion, an increase from the previous range of $3.48 billion to $3.51 billion.

Lululemon anticipates sales growth of between 6% and 7% in the fourth quarter of 2024, excluding an additional fiscal week.

Lululemon has revised its earnings per share forecast for the fourth quarter to be between $5.81 and $5.85, from its previous guidance of between $5.56 and $5.64. Additionally, the company now expects its gross margins to increase by 0.3 percentage points, instead of declining between 0.2 and 0.3 percentage points as previously forecasted.

Our guests responded well to our product offering during the holiday season, allowing us to increase our fourth quarter guidance, according to finance chief Meghan Frank.

Abercrombie anticipates its holiday quarter to be slightly better than expected, and has revised its net sales growth outlook to a range of between 7% and 8%, from the previous guidance of between 5% and 7%.

Abercrombie now anticipates a 15% increase in full-year sales, compared to its previous forecast of a rise between 14% and 15% for the period.

Abercrombie's holiday sales growth rate decreased significantly from the previous year, with a 21% increase in sales in 2019 compared to 2018.

Some investors who were previously bullish on Abercrombie may now be turning bearish after two years of explosive stock growth, as the company's growth starts to slow down and comparisons to the year-ago period become tougher.

Abercrombie's full-year sales guidance is similar to what it predicted last year, with revenue increasing by 16%.

In a news release, Abercrombie CEO Fran Horowitz announced that the company will prioritize profit growth over sales in the future, with the goal of increasing long-term shareholder value.

"Horowitz stated that he is confident in the power of the company's brands and operating model, and that he expects sustainable, profitable growth in 2025. He plans to leverage the company's healthy margin structure and balance sheet to grow operating income dollars and earnings per share at rates faster than sales."

The annual ICR conference in Orlando, attended by prominent U.S. retailers, is expected to reveal early holiday results and provide insights into their performance. The conference, which brings together Wall Street's biggest banks, law firms, private equity firms, and investors, sets the tone for consumer deal making and retailer performance at the beginning of the year.

The department store is now expecting sales to be at, or slightly below, its previously issued range of between $7.8 billion to $8.0 billion. The company released early results, but they didn't have good news to share like some of its competitors. Shares fell more than 3% in premarket trading.

Urban Outfitters reported a 10% increase in net sales for the two months ended Dec. 31, compared to the previous year. The comparable retail segment sales also grew by 6%, mainly due to the strength of online sales.

Urban's sales fell by 4%, while Anthropologie and Free People experienced growth of 10% and 9%, respectively.

Urban's rental service Nuuly experienced a 55% increase in sales and a 53% increase in average active subscribers.

Shares moved slightly higher in premarket trading.

Despite the anticipation of a blowout holiday shopping season, the National Retail Federation predicted that sales would only grow between 2.5% and 3.5%, with minimal real growth when inflation is factored in.

Some early indications suggest that the holiday season may be more promising than initially anticipated.

In the U.S., excluding automotive sales, retail sales during the holiday season increased by 3.8% compared to the previous year, as measured by Mastercard SpendingPulse, which tracks in-store and online sales across various payment methods.