New Albany, Ohio -- Margin squeezes and flagging same-store sales hurt Abercrombie & Fitch Co.’s fourth quarter profit dropped nearly 80% drop, to $19.6 million from $92.6 million a year earlier, amid margin squeezes and flat same-store sales.
"Our results for the fourth quarter were below our expectations in an extremely challenging environment.,” said Mike Jeffries, CEO and chairman, Abercrombie & Fitch Co. “However, we are confident that we are on track with our long-term strategy of leveraging the international appeal of our iconic brands to build a highly profitable, sustainable, global business.”
On a conference call with analysts, Jeffries blamed "highly aggressive promotional environment" for being unable to raise prices to counter the effect of higher apparel manufacturing costs.
Sales for the period ended Jan. 29 rose 16% to $1.33 billion, from $1.15 billion. In the United States, sales increased 4% to $962.2 million. Same-store sales overall were flat. By brand, same-store sales fell 4% at namesake stores, dropped 3% at Abercrombie kids and increased 2% at Hollister Co.
For the full year, the company reported net income of $127.7 million, compared with $150.3 million for the prior year. Sales rose 20% to $4.16 billion from $3.47 billion, and total same-store sales increased 5%. It opened 47 new international stores and closed 71 U.S. stores during fiscal 2011.
Plans in 2012 call for opening five international Abercrombie & Fitch flagship locations, one abercrombie kids flagship, and opening approximately 40 international Hollister stores.
Based on current new store plans and other planned expenditures, the company expects total capital expenditures for fiscal 2012 to be approximately $400 million, predominantly related to new stores and investments in the distribution center and direct-to-consumer operations.