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Reuters
Published
Nov 16, 2011
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Abercrombie Q3 profit misses estimates, shares fall

By
Reuters
Published
Nov 16, 2011

Teen clothes retailer Abercrombie & Fitch's quarterly profit missed analysts' estimates by a huge margin as competition made sure the retailer could not raise prices ahead of the holiday season.

Abercrombie & Fitch
Topless models lined up in front of Abercrombie & Fitch's new store in Salamanca, Spain on Nov 3, 2011 / Photo: A&F

Shares of the company fell 9 percent before the bell.

Abercrombie, which competes with rivals like American Eagle Outfitters and Aeropostale Inc in a highly promotional teen retail space, said its average price per unit was flat ahead of the holiday shopping season, meaning it has not been able to raise prices as needed.

Gross margins fell 360 basis points to 60.1 percent.

The company earned $50.9 million, or 57 cents a share, while analysts, on average, were expecting profits of 71 cents a share, according to Thomson Reuters I/B/E/S/.

The preppy retailer, which had steadily been gaining market share from rivals, said earlier in the month that sales had fallen at its European flagship stores, which are the pivot of its international expansion strategy.

However for the third quarter, total international sales including e-commerce rose 56 percent to $255.7 million. In the United States, which is its bigger market, sales rose 14 percent to $820.2 million.

Total sales rose 21 percent to $1.08 billion, more or less in line with Wall Street estimates.

Abercrombie shares were down 9 percent at $50.50 Wednesday before the bell. They closed at $55.7 on the New York Stock Exchange on Tuesday.

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