By Elizabeth Holmes
Of THE WALL STREET JOURNAL
Abercrombie & Fitch Co.'s (ANF) fiscal first-quarter loss
narrowed, and the high-priced teen-apparel retailer outlined
further plans to expand its presence overseas.
The New Albany, Ohio, company has struggled to sell its
high-priced clothing in the U.S. but is seeing fast growth
internationally. It plans to open a megastore in Madrid in 2011
along with its already announced Paris store that year, and
similarly sized outlets in Copenhagen and Fukuoka, Japan, this
year.
Chief Executive Michael Jeffries said the company sees
opportunities to open an additional 15 flagships for the brand
internationally through 2012.
"These are the most productive stores in the world, and there
are obvious cities where they belong and we are working very hard
to make these deals," Jeffries said during a conference call with
investors Tuesday. "I've been spending a lot of time on that plane"
scouting locations, he added.
(This story and related background material will be available on
The Wall Street Journal Web site, WSJ.com.)
For the quarter ended May 1, Abercrombie's loss narrowed to
$11.8 million, or 13 cents a share, from $59.2 million, or 68
cents, a year earlier. The prior-year quarter included costs
related to closing the company's Ruehl chain, which targeted older
customers.
Total sales jumped 14% to $687.8 million. Same-store sales
inched up 1% following a 30% decline last year.
Abercrombie's domestic business suffered deeply during the
recession as its high prices, lack of discounts and bland fashion
led to a sharp decline in sales. To bring customers back, it
resorted to severe markdowns at both its namesake and Hollister
chains.
Gross margin narrowed to 62.7% from 63.4%, the result of a lower
average price paid per item.
Jeffries said the company intends to limit discounts at
Abercrombie & Fitch as well as its kids brand, Abercrombie, in
the future. But the pace of promotions will likely continue at
Hollister, the lowest-priced brand in the Abercrombie portfolio
that targets teenagers.
"Promotion isn't a fundamental strength of ours, but we're
getting much, much smarter in Hollister in terms of what we
promote, how we promote it, where we promote it," Jeffries
said.
Jeffries also said the company is seeing improvements in its
women's fashion, especially in the tops category, which he said has
been problematic.
The company's shares recently fell 46 cents, or 1.1%, to
$40.33.
-By Elizabeth Holmes, The Wall Street Journal; 212-416-3636;
elizabeth.holmes@wsj.com