Abercrombie & Fitch Plunges on Weak Earnings, Cautious Outlook
Abercrombie & Fitch plunges 17% in premarket trading after the teen retailer posts worse-than-expected second-quarter results, blaming weak July sales. The retailer also offers a cautious outlook for the rest of the year.
One standout is likely to be Gap ( GPS), which also reports earnings after the markets close on Thursday. Wall Street is expecting earnings growth of 30% for the quarter to 64 cents a share. Despite the challenging U.S. environment, Abercrombie's Jeffries said the company is pleased with its "strong growth in our direct-to-consumer business and continued strong growth in China." "We have also made excellent progress on our profit improvement initiative during the quarter, and we now expect savings from this initiative to exceed $100 million annually," he said. "In addition, we are nearing completion of our long-term strategic review, and we are confident that this will provide us with a clear roadmap for sustainable growth in sales, profitability and return on invested capital." Abercrombie's gross profit rate rose 160 basis points in the quarter to 63.9%. -- Written by Laurie Kulikowski in New York. Follow @LKulikowski To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com. >To submit a news tip, email: firstname.lastname@example.org. Follow TheStreet on Twitter and become a fan on Facebook.