A Closer Look at Abercrombie and Fitch Post Earnings

NEW YORK, NY / ACCESSWIRE / August 31, 2016 / Abercrombie & Fitch Co. (NYSE: ANF) shares fell 20.29 percent to close at $18.29 a share Tuesday. The stock traded between $18.06 and $19.51 on volume of 23.02 million shares traded. The stock appears to be facing some resistance at $18.45 and $19.42 with some support at $16.80. On Tuesday, the retailer reported earnings for the second quarter that fell short of expectations. Abercrombie’s sales dropped for the 14th straight quarter and comparable sales fell a slightly steeper-than-expected, mainly due to lower traffic, including from tourists, at its flagship stores. The company no longer expects comparable sales to improve this year.

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“Our results for the quarter were largely in line with the expectations we set on last quarter’s earnings call. Flagship and tourist locations continued to account for the vast majority of the comparable sales decline as traffic remained a significant headwind. We were encouraged, however, by strong growth in the direct-to-consumer business, both domestically and internationally, and by a comparable sales recovery in the Hollister European business, including in the U.K.,” commented Arthur Martinez, Executive Chairman.

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A Closer Look at Abercrombie & Fitch’s Earnings

Abercrombie & Fitch reported revenues totaled $783.2 million for the second quarter of 2016, down by 4.0 percent when compared to a year ago. Comparable sales for the quarter fell 7 percent at Abercrombie stores and 2 percent at its sister chain Hollister, for an overall decline of 4 percent.

The company reported a GAAP net loss per diluted share of $0.19 for the second quarter ended July 30, 2016, compared to a GAAP net loss per diluted share of $0.01 for the second quarter last year.

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Going Forward

Abercrombie& Fitch expects “comparable sales to remain challenging through the second half of the year, with a disproportionate effect from flagship and tourist locations”. The company plans to open approximately 15 new stores in fiscal 2016, approximately 10 in international locations primarily in China and 5 in the U.S. 60 of the company’s U.S. locations are expected to close during the fiscal year through natural lease expirations.

“As we look to the rest of the year, we now expect flagship and tourist locations will continue to weigh on the business. Recognizing we are in a challenging environment, we are confident, however, that we are focusing on the right priorities and we expect to see traction in our business as we introduce new product and invest in marketing to drive awareness and relevance for our brands,” commented Arthur Martinez.

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