NEW YORK (
Abercrombie & Fitch
, the provocative teen retailer embroiled in controversy over resurfaced comments its CEO made years ago, said on Friday first-quarter comparable stores sales declined 17% compared to the year before and reported a quarterly net loss of $7.2 million, or 9 cents a share.
While the loss was better than what the New Albany, Ohio-based company reported a year earlier - a net loss of $21.3 million or 25 cents a share - Wall Street had forecast Abercrombie to post a net loss of 5 cents a share on revenue of $941.6 million.
The stock was plummeting more than 7% to $50.50 in premarket trading.
"Our results for the first quarter reflect a 16-cent improvement in earnings per share versus last year, including better than expected gross margin rate improvement and tight expense management," Chairman and CEO Mike Jeffries said in the earnings statement. "The first quarter proved to be more difficult than expected on the top-line due to more significant inventory shortage issues than anticipated, added to by external pressures."
"However, comparable sales trends progressively improved during the quarter and with the inventory headwinds largely behind us, we expect to see continued sequential improvement in the second quarter," Jeffries added. "We are also making good progress on our cross-functional initiatives, which we expect will generate substantial operating margin improvement on a sustainable, long-term basis."
Abercrombie's net sales for the quarter fell 9% to $838.8 million compared to the year before. Total U.S. sales, which include direct-to-consumer sales, decreased 17% to $534.9 million.
Total comparable sales for the quarter decreased 15%. Comparable store sales fell 17%, while online comparable sales fell 6%, the company said.
Pitted against consumer outrage over resurfaced comments Jeffries made seven years ago about why the teen retailer doesn't make its clothing in large sizes,
issued an apology earlier this week and pledged to take steps to show their commitment against bullying as well a more welcoming store culture.
Gross profit rate for the quarter was 65.9%, 720 basis points higher than last year`s first quarter gross profit rate. Abercrombie said the increase was driven by a benefit from a higher mix of spring merchandise selling and a decrease in product costs.
Marketing, general and administrative expense for the first quarter rose 2% to $118.8 million, due to increases in IT and outside services, partially offset by decreases in incentive compensation and other compensation related expenses.
Abercrombie said in the release that it is now "modestly more cautious" with regards to guidance for the rest of the year. The company now expects full year diluted earnings per share in the range of $3.15 to $3.25 versus the $3.49 a share analysts had forecast. Abercrombie had lowered its fiscal year guidance in the previous quarterly earnings results to $3.35 to $3.45 a share.
The projection assumes comparable sales to be slightly down for the balance of the year. The company expects second quarter diluted earnings per share to range between 28 cents and 33 cents.
-- Written by Laurie Kulikowski in New York.
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