Disaster at Abercrombie: Sales Fall 10% in Latest Quarter

In this photo made Wednesday, Nov. 11, 2009, a shopper holds a shopping bag in front of an Abercrombie & Fitch store in Portland, Ore. Preppy clothing seller Abercrombie & Fitch Co.'s third-quarter profit fell 39 percent as sales continued to be weak and the company worked to close its higher-priced Reuhl line, the company said Friday, Nov. 13, 2009. (AP Photo/Rick Bowmer)
AP Photo/Rick Bowmer
Abercrombie & Fitch reported comparable sales and profits that were far below Wall Street expectations, blaming a drop in store visits by shoppers, and said business will decline even more during the back-to-school quarter.

The teen retailer's comparable sales, which includes online sales and sales at stores open at least a year, fell 10 percent last quarter and the company said Thursday sales would drop off slightly more this quarter, which includes the back-to-school season.

It also gave a disappointing profit forecast, sending its shares down 17 percent to $38.85 in premarket trading.

Wall Street analysts were expecting a drop in comparable sales of only 2.5 percent.

The drop-off in business was felt most acutely at Abercrombie's Hollister chain, its largest, where comparable sales fell 13 percent. At its name-sake chain, comparable sales were down 6 percent.

Overall revenue fell 1 percent to $945.7 million, well below the $996.2 million analysts expected. The one bright spot was international revenue rose 15 percent.

Abercrombie (ANF) expects a profit of 40 cents to 45 cents a share for the current quarter, while analysts anticipate $1.06. The company said it wouldn't give projections beyond that, citing uncertainty around recent traffic trends.

For the second quarter that ended Aug. 3, the company said net income fell to $11.4 million, or 14 cents per share, from $17.1 million, or 20 cents per share a year earlier. Excluding items related to a project to lift profits, Abercrombie had a profit 16 cents per share, below Wall Street forecasts for 28 cents.

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Joan Kuzmin

Abercrombie needs to revamp its whole image. Kids in affluent areas shun this chain like the plague because of its unhip image with stylish kids. It also hypersexualizes both girls and boys. They need to hone a new image that actually embraces what style conscious kids want to wear in high school. My girls (from East Coast) rolled their eyes at their cousins/friends heavy Abercrombie wardrobe. It's just not cool anymore.

August 25 2013 at 5:14 PM Report abuse rate up rate down Reply