Tags: young | shoppers | profit | Abercrombie and Fitch

Abercrombie Beats Estimates, to Reduce Prices This Year

Wednesday, 26 February 2014 09:37 AM

Teen apparel retailer Abercrombie & Fitch Co. said it would reduce prices this year to deal with intense competition, after the company reported higher-than-expected quarterly revenue mainly due to discounting.

Abercrombie's shares, which have fallen about 25 percent in the year to Tuesday's close, rose as much as 9 percent on Wednesday morning.

"We do expect average unit retail to come down ... We need to be competitive on price, particularly female fashion, and we will aggressively look to reduce average unit cost to give us that flexibility," Chief Executive Mike Jeffries said on a post-earnings conference call.

Abercrombie, which has now reported eight straight quarters of same-store sales declines, said it would cut merchandise costs towards the second half of the year. It did not provide further details.

The company has been revamping its merchandise to woo back shoppers from "fast fashion" chains such as Inditex's Zara and Forever 21, which offer more fashionable clothing at lower prices.

Abercrombie said in November that it would expand its women's tops collection, offer larger sizes and more colors, and start selling shoes in a bid to attract customers.

The company said on Wednesday that it expected a profit of $2.15-$2.35 per share for 2014.

Analysts on average were expecting $1.62 per share, according to Thomson Reuters I/B/E/S.
Morningstar analyst Bridget Weishaar said she saw all the upside in the forecast based on cost cuts rather than on revenue growth. She said remained cautious on the stock in the long term.

Abercrombie said it expected gross savings of at least $145 million in 2014 from cost-cutting initiatives.

The company's net income fell to $66.1 million, or 85 cents per share, in the fourth quarter ended Feb. 1 from $157.2 million, or $1.95 per share, a year earlier.

Abercrombie said it saved about $30 million in costs in 2013.

Revenue fell 12 percent to $1.30 billion in the quarter.

The company earned $1.34 per share, excluding restructuring charges and other items.

Analysts on average had expected a profit of $1.03 per share on revenue of $1.26 billion.
Abercrombie said it sold more outerwear, accessories, denim and undergarments in the quarter.

The company also announced a $150 million accelerated share repurchase program, to be executed in the current quarter, and said it would buy back more shares over the year.

Abercrombie bought back shares worth about $116 million in 2013.

The company's shares were up 8.4 percent at $39.04 on the New York Stock Exchange on Wednesday. The stock is trading at 15.25 times forward earnings.

© 2018 Thomson/Reuters. All rights reserved.

1Like our page
young,shoppers,profit,Abercrombie and Fitch
Wednesday, 26 February 2014 09:37 AM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved