Abercrombie & Fitch Co. (ANF) swung to a fiscal
third-quarter loss as the teen-apparel retailer recorded charges
related to the restructuring of its intimate apparel brand, along
with another sharp drop in same-store sales.
"Our results for the third quarter reflect weakness in top-line
performance, which we expect to continue in the fourth quarter,"
Chief Executive Mike Jeffries said.
Earlier this month, Abercrombie said it expected a low
double-digit decrease in same-store sales for the fourth quarter
and significant gross margin erosion as the company clears out
excess inventory.
Abercrombie has been working to turn around weakness it showed
in previous quarters as its fashions failed to resonate with teens
and young adults. The company has been grappling with disappointing
sales at home and abroad, inventory challenges and an increase in
markdowns.
At Abercrombie's first meeting with analysts in more than 2.5
years roughly two weeks ago, the company detailed its plans to
improve profits following a long-term strategic review and said it
will offer larger sizes, more colors and styles online, in addition
to considering expanding other product categories like shoes and
accessories through third-party collaborations as it tries to win
back teens who have defected to trendier fast-fashion retailers
like Swedish retailer Hennes & Mauritz AB (HM-B.SK), known as
H&M, and Forever 21 Inc.
The company has also been closing stores in an effort to improve
margins in the U.S, and earlier this month unveiled a restructuring
plan for its intimate apparel brand Gilly Hicks, saying it plans to
close all of its stand-alone Gilly Hicks stores in the coming
months.
Overall, Abercrombie reported a loss of $15.6 million, or 20
cents a share, compared with a year-earlier profit of $84 million,
or $1.02 a share. Stripping out charges related to restructuring
plans for Gilly Hicks, other store asset impairment charges, and
charges related to the company's profit-improvement initiative,
adjusted per-share earnings for the latest quarter were 52
cents.
Abercrombie earlier this month had forecast per-share earnings
at the higher end of its downbeat August guidance of 40 cents to 45
cents a share.
Gross margin narrowed to 63% from 64.3%.
The company recently reported net sales fell 12% to $1.03
billion, below the $1.07 billion expected by analysts at that time.
Total same-store sales for the quarter, including
direct-to-consumer sales, dropped 14%, with U.S. same-store sales
decreasing 14% and international same-store sales dropping 15%.
Within the quarter, same-store sales were weakest in August and
September, the company said Thursday.
Results for the 2012 quarter were restated to reflect a shift in
the company's accounting method.
By brand, same-store sales including direct-to-consumer fell 13%
for Abercrombie & Fitch, 4% for abercrombie kids and 16% for
Hollister Co.
Abercrombie reiterated its recently reduced earnings outlook for
the year.
Shares fell 2.5% to $34.10 in recent light premarket trading.
Through Wednesday's close, the stock had fallen 27% since the start
of the year.
Write to Anna Prior at anna.prior@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires