Abercrombie & Fitch same-store sales plummet; outlook weak
By Phil Wahba
(Reuters) - Abercrombie & Fitch Co (ANF.N: Quote) reported comparable sales and profit far below Wall Street expectations on Thursday, blaming a drop in store visits by shoppers, and the teen retailer said business would decline even more during the current back-to-school quarter.
The company said comparable sales, including those online and at stores open at least a year, fell 10 percent in the second quarter ended August 3. Analysts had expected a drop of just 2.5 percent.
Abercrombie also issued a weak profit forecast, and its shares fell as low as $37.21, their lowest since October 2010. By midmorning they were at $38.35, down 18 percent.
The company and rivals Aeropostale Inc ARO.N and American Eagle Outfitters Inc (AEO.N: Quote) have struggled as young shoppers appear less interested in their logo-centric clothes than the variety of merchandise at chains like Zara, Forever 21 and H&M.
"One generation of customers has moved on, and the next generation doesn't see Abercrombie as cool," said Erik Gordon, a professor at the University of Michigan's Ross School of Business.
Hollister Co, Abercrombie's largest chain, felt the second-quarter drop in business most acutely, with a 13 percent decline in comparable sales. They were down 6 percent at the company's namesake stores.
Back in May, Abercrombie blamed poor comparable sales in the first quarter on its inability to get enough merchandise on shelves fast enough, and it forecast a small decline for the second quarter.
Overall, revenue in the latest quarter fell 1 percent to $945.7 million, well below the $996.2 million analysts expected. The one bright spot was international revenue, which rose 15 percent, including online sales. Continued...