This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Abercrombie & Fitch Plunges on Weak Earnings, Cautious Outlook

NEW YORK ( TheStreet) -- Abercrombie & Fitch (ANF - Get Report) plunged close to 20% in premarket trading Thursday after the teen retailer posted worse-than-expected second-quarter results, blaming weak July sales, and offered a cautious outlook for the rest of the year.

The New Albany, Ohio-based company said profit fell by one-third from last year's quarter to $11.4 million, or 14 cents a share. The company took 2 cents worth of charges related to an ongoing profit improvement initiative.

Net sales dropped by 1% for the quarter to $945.7 million, primarily due to fewer shoppers in its U.S. stores.

Consensus estimates called for the teen retailer to post earnings of 28 cents a share on revenue of $996 million.

Shares were tumbling 16.9% at $38.90 before the markets opened.

Total U.S. sales decreased 8% to $597.3 million, while international sales increased 15% to $348.4 million, the company said. Meanwhile, Abercrombie's direct-to-consumer sales jumped 21% to $154.3 million.

Total comparable sales for the quarter, including direct-to-consumer sales, fell 10%. Comparable U.S. sales decreased 11% and comparable international sales fell 7%. Within the quarter, comparable sales were weakest in July, the company said.

Also see: Best Buy, Dick's Sporting Goods: Tuesday's Retail Winners and Losers

Also see: J.C. Penney Reports Wider-Than-Expected Loss

"The second quarter was more difficult than expected due to weaker traffic and continued softness in the female business, consistent with what others have reported. In that context we are planning sales, inventory and expenses conservatively for the remainder of the year," Mike Jeffries, Abercrombie's chairman and CEO, said in the earnings release.

The company said it expects third-quarter sales to fall further, forecasting diluted earnings of 40 cents to 45 cents a share. Wall Street had estimated earnings of $1.06 a share.

The company didn't give guidance beyond that "due to a lack of visibility given recent traffic trends." It now plans to open fewer international and U.S. outlet stores. Abercrombie reiterated that it plans to close approximately 40 to 50 U.S. stores this year through natural lease expirations.

With retailers across the board citing weak consumer spending and fewer mall shoppers in July, the teen sector has been particularly hard hit. Abercrombie's competitor, American Eagle Outfitters (AEO), reported disappointing results on Wednesday, while Aeropostale (ARO), which reports after the bell on Thursday, already warned investors of a weak quarter.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
ANF $22.86 0.00%
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%
TSLA $218.42 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs