Abercrombie & Fitch (ANF) has reported its Q3 FY2023 results, outperforming expectations in both earnings per share (EPS) and revenue. The company posted a 20% year-over-year (YoY) increase in revenue, with net sales reaching $1.06 billion, surpassing the FactSet Consensus estimate of $981 million. EPS came in at $1.83, significantly beating the analysts' consensus of $1.18.

The impressive performance was driven by strong growth across both the Abercrombie and Hollister brands. Abercrombie brands showed exceptional growth of 30%, while Hollister brands experienced a solid back-to-school season, with a 11% net sales growth for the quarter. This growth was attributed to the company's effective playbook working globally across its brand portfolio and its ability to resonate with the teen customer.

In addition to the strong Q3 performance, Abercrombie & Fitch also raised its full-year guidance for net sales growth and operating margin. The company reported a free cash flow of $223.6 million, a significant improvement from the -$102.2 million reported in the same quarter last year. Gross margin (GAAP) also increased to 64.9%, up from 59.2% in the same quarter last year.

Same-store sales grew by 16% YoY, which was a significant beat compared to expectations of a 9% YoY increase. The company also increased its store locations by 9 over the last 12 months, ending the quarter with 760 stores.

While Abercrombie & Fitch's Q3 FY2023 results were impressive, the company provided in-line guidance for Q4. The company expects Q4 revenues to be in the low double-digit range, in line with the FactSet Consensus estimate of $1.34 billion, which calculates as +11.6%.

Overall, Abercrombie & Fitch's Q3 FY2023 results show a strong recovery and growth across its brands, with the company's effective strategies and initiatives resonating with its target customer. The company's ability to exceed expectations and raise its full-year guidance highlights its potential for continued growth in the future.

However, we are talking about a stock that had moved from $22/share to $72/share in just seven months coming into the report. In other words, any and all conceivable good news that stood to come within this quarterly report had already been baked into the name. Therefore, it's hardly surprising to see a sell-the-news reaction in the stock on Tuesday.