Tags: Abercrombie | malls | teens | clothing

Abercrombie Results Beat Estimates as Sales Decline Slows

Thursday, 29 May 2014 10:21 AM

Abercrombie & Fitch Co., the clothing retailer working to regain teens’ favor, posted a first-quarter loss that was narrower than analysts estimated as new styles of shorts and crop tops slowed its sales decline.

Excluding some items, the loss in the quarter ended May 3 was 17 cents a share, the New Albany, Ohio-based company said in a statement today. The average of 34 analysts’ estimates compiled by Bloomberg was for a loss of 19 cents.

Chief Executive Officer Mike Jeffries has been working to revive Abercrombie’s appeal among teenage shoppers who’ve strayed from the chain in favor of fast-fashion purveyors such as Forever 21 and Hennes & Mauritz AB. Abercrombie has introduced new crop tops with varying sleeve lengths and different styles of shorts to appeal to shoppers seeking a more customized look. First-quarter sales fell 1.9 percent to $822.4 million, topping analysts’ $796.3 million average estimate.

“They offer a few pieces that at least dabble in one of the most pervasive looks of summer so far,” Howard Tubin, a New York-based analyst at RBC Capital Markets in New York, said in a note before the results were released. “We do see some representation of other important trends for the season.”

He has the equivalent of a hold rating on the shares.

Abercrombie rose 8.5 percent to $38.10 at 8:04 a.m. in early trading in New York. The shares gained 6.7 percent this year through yesterday, compared with a 3.3 percent increase in the Standard & Poor’s 500 Index.

Abercrombie maintained its forecast for profit per share of $2.15 to $2.35 this year. Analysts estimate $2.35.

Same-Store Sales

First-quarter sales at stores open at least a year decreased 4 percent, slower than the 17 percent drop a year earlier and less than analysts’ average estimate for a 6.9 percent decline.

The net loss for the quarter widened to $23.7 million, or 32 cents a share, from $7.2 million, or 9 cents, a year earlier, the company said.

Abercrombie has been undergoing rapid change. The chain has cut Jeffries’s pay and stripped him of the chairman role. It created a new chief operating officer job and named four new independent directors to the board as part of a deal with activist investor Engaged Capital LLC.

The retailer also is working to reposition its brands. The main Abercrombie nameplate will be aimed at shoppers with more money to spend, rather than teens. The Hollister brand, a Southern California-influenced clothing line, will use low prices and rapidly changing styles to recapture customers who have turned to chains like Forever 21.

Revamping Stores

In an effort to lure shoppers back into stores, Abercrombie is revamping its mall-based locations. The Hollister stores are brighter, the music has been turned down, and the company has reduced the fragrance spritzed among the racks by 25 percent. The blinds have come off the Abercrombie windows in favor of displays and mannequins showcasing the clothing.

The chain has updated its merchandise, too. It has introduced black clothing, added larger sizes and will roll out a “classic fit” T-shirt online that’s looser than the company’s standard muscle-style shirt. Abercrombie also is reducing the use of logos across its brands and partnering with third parties to produce new items.

In the meantime, the company has aligned 69-year-old Jeffries’s compensation with the retailer’s performance. He didn’t receive any performance-based bonuses in fiscal 2013, accounting for much of the decrease in his total compensation. He also didn’t get a cash bonus or any equity awards during the year because Abercrombie failed to achieve financial targets and its stock performed poorly. Jeffries’s salary remained about the same.

The company’s stock fell 31 percent in 2013, marking the third straight year of declines.

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Abercrombie & Fitch Co., the clothing retailer working to regain teens' favor, posted a first-quarter loss that was narrower than analysts estimated as new styles of shorts and crop tops slowed its sales decline.
Abercrombie, malls, teens, clothing
Thursday, 29 May 2014 10:21 AM
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