GPS Gap Inc

Abercrombie & Fitch Co.'s turnaround efforts were derailed last quarter, as fewer shoppers visited its stores and the teen retailer tried to hold the line on discounts.

Sales at stores open at least a year fell 4% in the fiscal first quarter ended April 30, marking a reversal from the preceding quarter, when the company reported its first gain in more than three years. Analysts had expected a 1.5% increase.

Executive Chairman Arthur Martinez attributed the decline to "traffic headwinds, particularly in international markets and in our U.S. flagship and tourist stores." Same-store sales are expected to remain challenged in the second quarter and improve in the second half of the year.

The New Albany, Ohio, company said total revenue fell 3% to $685.5 million for the quarter. Its net loss was $39.6 million, or 59 cents a share, compared with $63.2 million, or 91 cents, a year ago. Analysts had expected a loss of 51 cents a share on $709 million of revenue, according to FactSet.

As in previous quarters, the company's Hollister brand performed better than the flagship brand. Hollister sales at stores open at least a year were flat, while that metric fell 8% at Abercrombie.

Abercrombie has been hit hard by changing consumer preferences, declining mall traffic and fierce competition from fast-fashion players. After the company's highly sexual image cultivated by former CEO Mike Jeffries started alienating shoppers, the retailer began updating its merchandise assortment and revamping stores.

Mr. Martinez said the company has also pulled back on promotions and is now selling more merchandise at full price. Even as many retailers are anticipating a highly promotional environment in the coming months, Mr. Martinez said he doesn't expect to change the pricing strategy at Abercrombie. Passing up short-term gains from promotions is a "price that needs to be paid" for the long-term health of the company, he said in an interview.

Abercrombie joins a growing list of retailers reporting a weak start to the year. Poor results at department stores and specialty retailers have illustrated consumers' shift away from brick-and-mortar stores. Amazon.com Inc., meanwhile, has made an aggressive push into fashion and apparel sales.

"The traffic situation is a systemic problem for the industry," said Mr. Martinez. "Our job is to make the most of the traffic we do get."

He said Abercrombie hasn't ruled out the option of selling merchandise on Amazon. "As our brands come back to their status and health, we will be looking for additional channels to take our products," he said. "I would never say never to anything, but we have an awful lot of work to do before we can think of anything like that."

Last week, Gap Inc. CEO Art Peck said in response to an investor's question at the annual shareholder meeting that the company is open to selling merchandise on Amazon and other third parties.

Abercrombie has been operating without a chief executive for more than a year. Since Mr. Jeffries departed in December 2014, the company has been run by an office of the chairman, which includes Mr. Martinez.

The retailer recently promoted Hollister brand President Fran Horowitz to the role of company president and chief merchandising officer. Ms. Horowitz is seen as a top candidate for the CEO job.

On Monday, the company named Target Corp. veteran Stacia Andersen and Victoria's Secret veteran Kristin Scott to run the Abercrombie and Hollister brands, respectively. Ms. Andersen will replace Christos Angelides, who stepped down from his role in December. The company's chief operating officer, Jonathan Ramsden, is also departing from his role effective June 15.

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com

(END) Dow Jones Newswires

May 26, 2016 08:25 ET (12:25 GMT)

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