On Tuesday, the clothing retailer pre-announced revenue for the 13 weeks ended Nov. 2 of $1.03 billion, 12% lower than a year ago and $40 million less than analysts surveyed by Yahoo! Finance had expected. Total comparable-store sales was 14% lower, down 14% in the U.S. and 15% internationally.
For the full year, the Ohio-based company projected earnings of $1.50 a share, considerably lower than the $1.96 a share Thomson Reuters surveys averaged. The weak earnings forecast is a result of anticipated low single-digit sales growth in the fourth quarter and gross margin erosion as the company clears excess inventory.
"Our results for the third quarter reflect continued top-line challenges, with overall spending among younger consumers remaining weak. Until we have seen a clear trend improvement, we are continuing to take a cautious approach into the fourth quarter and are working to end the year with appropriate levels of fall carryover inventory," said CEO Mike Jefferies in a statement.
Abercrombie also said it will close all 28 standalone Gilly Hicks stores by the end of the first-quarter 2014, and will incur a related one-time charge of between $90 million to $100 million in the third quarter this year.
During an analyst meeting Wednesday, executives said they will expand the sizes and fits of its clothing by spring in an attempt to attract increased sales. The company came under fire earlier this year when comments CEO Mike Jefferies made in 2006 resurfaced earlier this year, with Jefferies' saying the brand was "exclusionary" and only wanted to "market to cool, good-looking people". Currently, the store offers women's sizes no bigger than a large.