Abercrombie & Fitch Co. (ANF: Quote) Wednesday reported a lower profit for the second quarter, but above estimates, amid a modest growth in sales. The casual apparel retailer backed its full-year earnings view issued earlier this month. The shares are trading higher by 7.9 percent.
Mike Jeffries, ANF's CEO, said, "The second quarter results we are reporting today are disappointing and below our expectations coming into the quarter. In particular, we saw a further deceleration in the trend in our international stores, while our U.S. chain stores also comped negatively for the quarter for the first time since 2009."
Net income plunged to $15.52 million or $0.19 per share from $32.03 million or $0.35 per share in the prior year. On average, 30 analysts polled by Thomson Reuters expected earnings of $0.17 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales rose 4 percent to $951.41 million from $916.76 million. Analysts expected revenues of $993.98 million.
Including direct-to-consumer sales, U.S. sales decreased 5 percent to $648.0 million, while International sales climbed 31 percent to $303.4 million. Total company direct-to-consumer sales, including shipping and handling, increased 25 percent to $127.7 million.
Comparable store sales decreased 10 percent, with a 11 percent drop for Abercrombie & Fitch, 10 percent decline for abercrombie kids, and 10 percent decrease for Hollister Co.
By brand, Abercrombie & Fitch generated $362.5 million, abercrombie kids $76.3 million and Hollister Co. $485.6 million.
Further, the retailer backed its full-year earnings view issued earlier this month, which was scaled down due to a lower sales trend than previously projected.
The company expects full-year earnings per share of $2.50 to $2.75. The projection assumes comparable store sales decline of 10 percent for the second half of the year, as well as the impact of a stronger US dollar and an increase in the effective tax rate. While announcing its first-quarter results, the company had forecast earnings per share in a range of $3.50 to $3.75 for the year.
Wall Street looks for full-year earnings of $2.56 per share, on sales of $4.40 billion.
On August 14, the Board of Directors declared a quarterly cash dividend of $0.175 per share. The board also increased the existing share repurchase authorization by ten million shares, bringing the shares available for purchase to 22.9 million shares, as per the share repurchase authorization.
Abercrombie & Fitch said it expects to open 30 international Hollister Co. chain store in fiscal 2012 compared to a previous expectation of close to 40 stores. The company also plans a pause in new flagship store commitments, other than a planned Shanghai location. These plans will be discussed at a strategic update today.
ANF, which closed at $32.33 on Tuesday, is adding 7.9 percent in pre-market trading at $34.89.
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by RTT Staff Writer
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