Abercrombie & Fitch misses expectations as sales sag, sparking share sell off – though the Hollister brand remains flat
News of its 13th quarter-on-quarter sales decline has sparked a sell off of Abercrombie & Fitch stock.
The fashion retailer's shares are down by 13 per cent in the pre-market, after the chain missed expectations and warned the current quarter isn't looking any better.
Shares that were up by over 20 per cent over the past 12 months on hopes declining sales were levelling off, took a big step backwards.
The company is overhauling its merchandise portfolio but has been unable to get ahead of fast-moving US consumer habits that are heading online at pace.
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There's hope the US economic recovery could begin to better support sales as inflation begins to pick up.
Like-for-like store sales ditched four per cent over the period, against expectations for a 1.2 per cent increase.
Revenue slid by 3.4 per cent, to $685.5m, down from $709.4m (£482m) over the same period last year. Wall Street was betting on $705.9m.
Abercrombie lost $39.6m, or 59 cents per share, worse than the 50 cents per share loss that had been pencilled in.
In the first-quarter of last year the chain lost $63.2m, or 91 cents per share.
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Arthur Martinez, executive chairman, warned over the current quarter but raised hopes for a pick up before the end of the year.
He said:
Our results for the quarter reflect significant traffic headwinds, particularly in international markets and in our US flagship and tourist stores, resulting in negative comparable sales.
However, in the face of these headwinds, we were encouraged by our US business, where comparable sales improved in the Hollister brand, and gross margin rate increased meaningfully for both brands.
Overall, our business remains well managed in these challenging times, with our assortment and customer-centricity efforts driving improved conversion, and expense and inventory well controlled.
At the end of last year brand president Christos Angelides left Abercrombie & Fitch after just over a year at the struggling US fashion label.
Angelides, who is credited with being the driving force behind much of Next's success, left the UK high street retailer last autumn. While he notched up 28 years at Next, he managed just a year and two months at A&F.
The year before controversial chief executive Michael Jeffries resigned right before the busy Christmas trading period.