Casual apparel retailer Abercrombie & Fitch Co. (ANF) is expected to report fourth-quarter results before the market opens Tuesday. On average, 35 analysts polled by Thomson Reuters expect the company to earn $0.87 per share for the quarter, with estimates ranging between $0.70 and $0.96 per share. Revenue consensus estimate for the quarter is $953.65 million. Analysts' estimates typically exclude special items.
On June 16, 2009, the company's Board of Directors approved the closure of 29 Ruehl branded stores and related direct-to-consumer operations. The closure was expected to be completed by the end of the fiscal year. The company expected aggregate pre-tax charges $60 million to exit the Ruehl business, of which $10.1 million was incurred in the third quarter and $23.6 million in the second quarter of 2009. The remaining charges, which could vary from the projected total, are expected to be substantially recognized during the fourth quarter.
Credit Suisse said in a client note last week that the company would be reporting Ruehl as a discontinued operation for the first time, expecting a loss of $0.08-$0.10 per share in the quarter.
In the fourth quarter, New Albany, Ohio-based Abercrombie & Fitch said its comparable store sales decreased 13% from last year. The company had reported depressing comparative store sales figures in November and December, but January turned out better for the retailer. Comparative or same store sales are an important gauge of a retailer's health, as it showcases the performance of stores open for more than a year.
In the four-week period ended November 28, 2009, the company's comparable store sales decreased 17%. The decline in same-store sales was 19% for the five-week period ended January 2, 2010. But, the company's January comparable store sales increased 8%.
In the third quarter, the company reported a decline in profit, hurt by sharp drop in comparable store sales, despite a one-time benefit. Third-quarter net income fell to $38.78 million or $0.44 per share from $63.90 million or $0.72 per share in the year-ago quarter. Net sales for the quarter decreased 15% to $765.40 million from $896.34 million in the same quarter last year. Comparable store sales decreased 22% from last year.
In the fourth quarter of 2008, the company's net income was $68.41 million or $0.78 per share and net sales totaled $997.96 million.
In fiscal 2008, the retailer's net income was $272.26 million or $3.05 per share. Net sales in 2008 amounted to $3.540 billion. Segment-wise, Abercrombie & Fitch division reported sales of $1.531 billion and abercrombie contributed $420.52 million to total sales. Hollister segment's sales were $1.514 billion and RUEHL had annual sales of $56.22 million. In Gilly Hicks, sales in 2008 amounted to $17.86 million.
For the full year, analysts expect the retailer to earn $0.90 per share on revenues of $2.98 billion. Credit Suisse estimates the company's headline earnings to be $0.08-$0.10 per share higher than its full-year estimate of $0.81 due to the discontinued Ruehl business.
In the conference call, the brokerage expects the management of the retailer to update on the store closure plan that should help comparable sales and EBIT margin in F10/F11 and dwell on the company's international expansion. A discussion of future expense opportunity and an increased emphasis on e-commerce opportunities are likely to be discussed, Credit Suisse believes. However, the brokerage does not expect the management to give earnings or comps guidance for fiscal 2010.
Among others in the industry, American Eagle Outfitters, Inc. (AEO) is scheduled to report fourth-quarter results before the market opens on March 10. Analysts expect earnings of $0.33 per share on revenues of $962.21 million.
Gap Inc. (GPS), another apparel retailer, is expected to report earnings of $0.49 per share, on revenues of $4.22 billion, when it reports fourth-quarter results on February 25.
ANF closed Friday's regular trade at $33.85, up $0.85 or 2.58%, on 4.15 million shares. For the past year, the stock traded in the range of $16.95-$42.31.
For comments and feedback: editorial@rttnews.com