Tags: Abercrombie | Fitch | Earnings | Sales

Abercrombie & Fitch Posts Quarterly Loss as Sales Slump

Thursday, 21 November 2013 08:05 AM

Abercrombie & Fitch Co. moved to a loss in its third quarter, dragged down in part by charges related to closing its Gilly Hicks stores. Its adjusted profit topped analysts' estimates, but the retailer's sales softened and it said sales weakness continues in the fourth quarter.

Its stock fell in premarket trading on Thursday.

Earlier this month Abercrombie and Fitch said that it plans to close all of its stand-alone Gilly Hicks stores. The New Albany, Ohio, company operated 28 of the intimate apparel stores in the U.S. and abroad at the end of its second quarter. It will continue to sell its Gilly Hicks products through its Hollister stores and website.

For the three months ended Nov. 2, the retailer lost $15.6 million, or 20 cents per share. That compares with a profit of $84 million, or $1.02 per share, in last year's third quarter.

Excludes costs tied to the Gilly Hicks store closings and some other charges, earnings were 52 cents per share. The recent quarter's per-share results were helped by a 7 percent drop in the number of outstanding shares since last year.

Analysts predicted adjusted earnings of 44 cents per share, according to FactSet.

Revenue slipped 12 percent to $1.03 billion from $1.17 billion. Wall Street expected revenue of $1.04 billion.

Total U.S. sales, including online and catalog sales , declined 18 percent to $674.9 million. Total international sales rose 2 percent to $358.4 million.

Sales at stores open at least a year, including online and catalog, dropped 14 percent. The figure also fell 14 percent in the U.S. and declined 15 percent internationally. Online and catalog sales comparable sales rose 11 percent.

Sales at stores open at least a year is a key indicator of a retailer's health, because it measures growth at ongoing locations while excluding results from stores recently opened or closed.

When looking at its brands, the weakest results were at Hollister Co., with a 16 percent sales decline. Its namesake brand posted a 13 percent drop, while abercrombie kids reported a 4 percent decline.

Abercrombie & Fitch maintained its outlook for full-year adjusted earnings of $1.40 to $1.50 per share. Analysts predict earnings of $1.55 per share.

The retailer said its forecast is based on a projected low double-digit percentage decline in fourth-quarter sales at stores open at least a year.

On Tuesday, Abercrombie & Fitch's board declared a quarterly dividend of 20 cents. The dividend is payable on Dec. 17 to shareholders of record on Dec. 2.

Shares of Abercrombie and Fitch dropped $1.04, or 3 percent, to $33.95 before the market open. The stock closed Wednesday's regular session at $34.99, down 27 percent since the start of the year.

The company had 1,063 stores at quarter's end.

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Abercrombie & Fitch reported a quarterly loss, with comparable-store sales declining for the seventh straight quarter as the teen apparel retailer struggles with the changing tastes of young shoppers.
Thursday, 21 November 2013 08:05 AM
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