Abercrombie & Fitch earnings stumble, stock slumps
Teen retailer Abercrombie & Fitch Co. stumbled hard in its first quarter, with same-store sales diving 15% and profit missing Wall Street’s expectations.
The company, fresh off a mea culpa over Chief Executive Mike Jeffries’ controversial comments about the brand’s “exclusivity,” said it lost $7.2 million, or 9 cents a share after losing $21.3 million, or 25 cents a share, during the same period a year earlier.
Analysts had expected the loss in the first quarter, which ended May 4, to be 5 cents a share.
Abercrombie’s revenue also took a body blow, sliding 8.9% to $838.8 million. In the U.S., sales dove 17% to $534.9 million, dragging down a 10% boost in international sales.
But the double-digit plummet in same-store sales, which strips out volatility by only considering locations open more than a year, was especially disconcerting to investors.
The gauge declined 13% for Abercrombie’s eponymous brand and 18% for its Hollister label. The company, which operated 1,053 stores at the end of the quarter, said it expects to close 40 to 50 stores in the U.S. during the year as leases expire.
Abercrombie stock slumped as much as 11.8% in morning trading Friday to $47.94 a share.
The quarter “proved to be more difficult than expected on the top-line due to more significant inventory shortage issues than anticipated, added to by external pressures,” Jeffries said in a statement.
But the inventory issues have largely passed, he said.
Abercrombie said it now expects same-store sales to continue dipping through the rest of the year. The New Albany, Ohio, company forecasts earnings per share of 28 cents to 33 cents for the current quarter and weakened its predictions for the full year to $3.15 to $3.25.
Abercrombie has spent the week trying to stem protests over Jeffries’ comments in a 7-year-old interview that the company’s aim is to “go after the cool kids.”
Executives met with a teen activist who garnered 68,000 signatures on a Change.org petition demanding an apology and more efforts to include larger clothing sizes.
“We sincerely regret and apologize for any offense caused,” the retailer said in a statement. The company is also awaiting news on a possible injunction in Colorado that could force it to revamp its store exteriors to be more inviting to disabled shoppers.
“This is a story with lots of moving parts, that all seem to be stalled-out at the moment,” said Howard Tubin, an analyst with RBC Capital Markets, in a note.
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