Abercrombie & Fitch posts steeper-than-expected loss as pandemic keeps stores shut
May 28, 2020
Abercrombie & Fitch Co reported a steeper-than-expected quarterly loss on Thursday, hurt by plunging demand for apparel as most of its stores were forced to shutter to curb the spread of the novel coronavirus, sending the retailer’s shares down as much as 10%.
The temporary closures of its recently remodeled stores have slowed Abercrombie’s efforts to revive its struggling flagship clothing brand, hurt by past fashion missteps. The crisis also hampered growth at Hollister.
A wide slate of retailers, who were already struggling with online competition, have also borne the brunt of financial pain due to the COVID-19 pandemic, with many being forced into bankruptcy.
“(We are) trying to understand what the new normal is, because there is certainly nothing like the old normal, with reduced footfall in the stores, whether it’s from demand or limiting the amount of people in the stores,” Chief Financial Officer Scott Lipesky said on a post-earnings call.
Abercrombie said it was not providing a detailed forecast for the second quarter or the full year, but added that sales at its reopened stores in the United States and EMEA regions were at about 80% and 60%, respectively, of what they were a year-ago.
The only bright spot in the quarter was Abercrombie’s digital sales that rose 25% as online shoppers bought more loungewear, knits and joggers as well as Gilly Hicks’ new activewear while they stayed at home.
Net sales fell 34% to $485.4 million in the first quarter ended May 2, its biggest drop in over a decade, missing expectations of $497.3 million, according to Refinitiv Eikon data.
Net loss attributable to the company widened to $244.2 million, from $19.2 million a year earlier, hit by impairments and tax-related charges. Excluding one-time items, the company reported a loss of $3.29 per share, wider than analysts’ expectations of a loss of $1.39 per share.
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