Abercrombie & Fitch Co. (ANF) swung to a
bigger-than-expected profit for its fiscal second quarter on
rebounding sales, though margins continued to fall as discounting
continues.
The high-priced teen-apparel retailer also announced plans to
close 60 domestic stores this fiscal year, predominantly at year's
end, and cut its planned international growth for the Hollister
chain by 20%. As such, capital spending is seen coming in at the
low end of prior expectations.
Abercrombie, which had 1,098 stores as of July 31, last year
significantly boosted discounting, a practice from which it had
previously shied away, as shoppers were more price conscious and
were staying away from the company's wares.
Chairman and Chief Executive Mike Jeffries said Tuesday, "We are
gaining traction and are very excited by what we see ahead of
us."
Abercrombie has seen signs of recovery as increased consumer
spending has boosted the sector, though the key back-to-school
season is underway and could change the equation for Abercrombie's
fortunes as recent spending has been weaker overall. Still, the
company has now seen revenue jump by double digits the past two
quarters, rebounding from big prior-year declines.
For the quarter ended July 31, Abercrombie reported a profit of
$19.5 million, or 22 cents a share, compared with a year-earlier
loss of $26.7 million, or 30 cents a share, including a 21-cent
loss from the closing of its high-end Ruehl business.
Analysts polled by Thomson Reuters had most recently forecast
earnings of 16 cents.
Gross margin fell to 65.1% from 66.6%.
Revenue jumped 17% to $745.8 million, the company said earlier
this month, with same-store sales rising 5% overall. Abercrombie
said Tuesday the same-store results were led by 8% growth at its
namesake operations.
Shares closed at $37.63 on Monday and were inactive premarket.
The stock is up 8% this year.
-By Nathan Becker and Kevin Kingsbury, Dow Jones Newswires;
212-416-2855; nathan.becker@dowjones.com