Mar 4, 2015
Abercrombie & Fitch sees further fall in sales of logo-focused clothes
Mar 4, 2015
Teen apparel retailer Abercrombie & Fitch Co said the factors that led to a drop in sales in the fourth quarter - a strong dollar and weak demand for clothing featuring its name and logo - would persist in the first half of its fiscal year.
Shares of the company, which reported lower-than-expected sales for the third straight quarter on Wednesday, fell 8 percent to $22.08 in premarket trading.
Abercrombie, once a teen favorite, is struggling to revive sales of its namesake and Hollister brands and focus less on its logo-centric clothing.
Teen apparel retailers such as Abercrombie, American Eagle Outfitters Inc and Aeropostale Inc have suffered as young American shoppers shift to trendier and cheaper offerings from "fast fashion" chains such as Forever 21, Inditex's Zara and H&M.
Abercrombie has been launching new styles in denim and floral prints for women, but low mall traffic has made it difficult for the company to show off its new assortment.
The company said it expects "the negative impact from reduced logo sales to modestly abate in the first half of the fiscal year and neutralize in the second half."
The strong dollar would offset benefits from cost cuts, Abercrombie said. About a third of its revenue is generated outside the United States.
Total comparable sales fell 10 percent in the fourth quarter ended Jan. 31, more than the 8.2 percent decline analysts polled by research firm Consensus Metrix were expecting.
Net sales slid 14 percent to $1.12 billion, while net income fell to $44.4 million, or 63 cents per share. Excluding items, the company earned $1.15 per share.
Analysts on average were expecting a profit of $1.15 per share on revenue of $1.17 billion, according to Thomson Reuters I/B/E/S.
$1 = £0.66
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