Casual apparels retailer Abercrombie & Fitch Co. (ANF) reported Friday a loss for the first quarter that narrowed from last year, reflecting significantly improved gross margins amid lower product costs. Loss per share came in wider than analysts' expectations, and quarterly revenues missed their estimates. The company also slashed its earnings guidance for the full-year 2013.
"Our results for the first quarter reflect a sixteen cent improvement in earnings per share versus last year, including better than expected gross margin rate improvement and tight expense management. The first quarter proved to be more difficult than expected on the top-line due to more significant inventory shortage issues than anticipated, added to by external pressures," Chairman and CEO Mike Jeffries said in a statement.
The New Albany, Ohio-based specialty retailer reported a net loss of $7.20 million or $0.09 per share for the first quarter, narrower than $21.31 million or $0.25 per share in the prior-year quarter.
On average, 31 analysts polled by Thomson Reuters expected the company to report a loss of $0.05 per share for the quarter. Analysts' estimates typically exclude special items.
Total net sales for the quarter declined 9 percent to $838.77 million from $921.22 million in the same quarter last year, and missed twenty-eight Wall Street analysts' consensus estimate of $941.66 million. Comparable store sales decreased 15 percent.
U.S. sales, including direct-to-consumer sales, decreased 17 percent to $534.9 million, while international sales, including direct-to-consumer sales, grew 10 percent to $303.9 million from last year. Total Company direct-to-consumer sales, including shipping and handling, decreased 10 percent to $132.7 million from a year ago.
Gross margin for the quarter expanded 720 basis points to 65.9 percent as cost of goods sold, as a percentage of total sales, improved 720 basis points from last year.
On Tuesday, the company declared a quarterly cash dividend of $0.20 per share on the Class A Common Stock, payable on June 18 to shareholders of record on June 3, 2013.
Looking ahead to the second quarter, the company expects earnings in a range of $0.28 to $0.33 per share. Analysts currently project earnings of $0.31 per share.
For fiscal 2013, the company slashed its earnings guidance to a range of about $3.15 to $3.25 per share from the prior forecast in the range of $3.35 to $3.45 per share. Street is currently looking for full-year 2013 earnings of $3.49 per share.
The projection assumes comparable sales, including direct-to-consumer, to be slightly down for the balance of the year.
"However, comparable sales trends progressively improved during the quarter and with the inventory headwinds largely behind us, we expect to see continued sequential improvement in the second quarter. We are also making good progress on our cross-functional initiatives, which we expect will generate substantial operating margin improvement on a sustainable, long-term basis," Jeffries added.
ANF closed Thursday's regular trading session at $54.37, up $0.92 on a volume of 2.04 million shares. In the past 52-week period, the stock has been trading in a range of $28.64 to $55.23.
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