Fashion and Beauty
Abercrombie off the mark in 3Q as turnaround efforts sputter
Source: Shutterstock.com
NEW ALBANY, Ohio – Abercrombie & Fitch’s plan to turn around its once-popular teen clothing brand failed to bring back shoppers to its stores.
The company said Friday that a key sales measure fell for the third straight quarter, that its profit plummeted 81 per cent in the latest quarter and that it expects a rough holiday season for the Abercrombie brand.
Shares of Abercrombie & Fitch fell more than 13 per cent by midday Friday.
Once a top shop for teens, Abercrombie has struggled to attract youngsters who are more likely to shop at cheaper fast-fashion chains such as H&M and Forever 21. Abercrombie ditched its sexy advertising and banished shirtless male models from its stores last year, but people are still not coming to its stores like they had been. Sales at established Abercrombie stores fell 14 per cent in the most recent quarter, and the company said it expects the brand to remain “challenging” throughout the rest of the year.
When all its brands are included, sales at established stores fell 6 per cent in the quarter. That’s far below the 4.4 per cent drop that analysts expected, according to FactSet. The New Albany, Ohio-based company operates 900 Abercrombie and Hollister stores around the world.
Other retailers have reported weak results. The owner of Gap, Old Navy and Banana Republic said late Thursday that its third-quarter profit fell, and shares of Gap Inc. dropped 12 per cent Friday.
Overall, the company reported net income of $7.9 million, or 12 cents per share, in the third quarter, down from $41.9 million, or 60 cents per share, in the same period a year ago.
Earnings, adjusted for non-recurring gains, were 2 cents per share. The results missed Wall Street expectations. Analysts had expected earnings of 19 cents per share, according to Zacks Investment Research.
Revenue fell 6 per cent to $821.7 million in the period, missing the $830.6 million that analysts expected, according to Zachs.
Shares of Abercrombie & Fitch Co. fell $2.27, or 13.4 per cent, to $14.78 in midday trading Friday. Its shares are down 37 per cent since the beginning of the year.
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