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Abercrombie & Fitch Shares Plummet As Earnings, Comps Badly Miss

Friday, November 18, 2016 6:17
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Clothing retailer Abercrombie & Fitch Co. (NYSE:ANF) early Friday posted disappointing third quarter earnings results, hurt by a massive drop in sales at established stores.

The New Albany, Ohio-based company reported Q3 adjusted net income of $0.02 per share, which was a full 22 cents worse than the $0.24 profit expected by analysts. Revenues fell 6.5% from last year to $821.7 million, also badly missing Wall Street’s view of $832.48 million.

Comparable store sales fell 6% from the year-ago period, which was much worse than the 4% drop that analysts anticipated. Abercrombie & Fitch stores saw comps plunge 10%, while Hollister comps fell a more respectable 1%.

Abercrombie said that net sales for the third quarter decreased 7% to $531.4 million in the U.S., and fell 5% to $290.3 million in international markets compared to last year. Direct-to-consumer and omnichannel sales grew to about 23% of total company net sales for the third quarter, compared to ~21% of total company net sales last year.

Q3 gross profit rate was 62.2%, down 60 basis points year-over-year.

Looking ahead, A&F forecast Q4 comps to be “challenging,” down about 3.2% year-over-year. Abercrombie also expects gross margins to fall slightly, hurt by lower prices but partially buoyed by lower input costs.

The company commented via press release:

“As expected, our third quarter was challenging. While Hollister improved sequentially, it was more than offset by disappointing performance in A&F. On a total company basis, conversion trends remained positive across both channels and the direct-to-consumer business grew domestically and internationally. In addition, we remained disciplined as expense and inventory were well controlled.”

Abercrombie shares fell $2.13 (-12.58%) to $14.80 in premarket trading Friday. Prior to today’s report, ANF had plunged 37.25% year-to-date, versus a 7.41% gain in the benchmark S&P 500 during the same period.


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