ANF Abercrombie and Fitch Co

Abercrombie & Fitch Co. showed progress in its efforts to revamp its brand and wean its customers off heavy discounts, helping the teen retailer post a higher quarterly profit.

Profit more than doubled to $42.3 million in the three months through Oct. 31, from $18.2 million a year ago.

Sales declined 4% to $878.6 million but were flat excluding currency fluctuations. Sales excluding newly opened or closed stores decreased 1%. By that measure, sales were down 5% at the company's namesake chain, but they were up 3% at Hollister, the first time that brand has grown same-store sales since January 2012.

Arthur Martinez, Abercrombie's executive chairman, said in an interview that the results were driven by "a conscious strategy to wean ourselves off heavy levels of promotions."

"Consumers responded to our full-priced products, and we were able to reduce the number and intensity of promotions," Mr. Martinez said. As a result, the gross margin rate increased to 63.7% in the quarter from 62.2% a year ago.

The New Albany, Ohio-based company, which operates more than 900 stores, is trying to refashion its image after its former strategy of using sex-tinged marketing and an exclusive mind-set to fuel demand wore thin with consumers.

Shoppers, particularly women, responded to new looks at Hollister, which included tops with more color, design and fashion, Mr. Martinez said. He added that Abercrombie continues to struggle with male shoppers in the U.S., where its image has come under fire in recent years.

"We are working to reverse trends that were in place for a relatively long time," Mr. Martinez said.

The company expects sales excluding newly opened or closed locations to be flat in the fourth quarter, an improvement from last year, when they fell 10%. Abercrombie's same-store sales have declined for more than seven quarters.

Still, Mr. Martinez sounded a cautious note on the year-end holiday season.

"Given that some of our mall-based competitors have seen inventory back up, our expectation is that the promotional drumbeat is going to be very intense," he said.

Gap Inc. on Thursday cut its profit projection for the year as the chain continues to revamp its namesake brand. Gap reported a 2% decline in same-store sales for the third quarter, including a 12% decline in its Banana Republic stores.

Write to Suzanne Kapner at Suzanne.Kapner@wsj.com

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(END) Dow Jones Newswires

November 20, 2015 07:55 ET (12:55 GMT)

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