Abercrombie Q4 profit tops view; same-store sales decline

New Albany, Ohio -- Abercrombie & Fitch Co.’s net income rose to $157.2 million for the fourth quarter, compared with $45.8 million a year earlier for a 13-week period. The chain said its net income was calculated using a new system for valuing inventory



Sales rose 11% to $1.47 billion for the 14 weeks ended Feb. 2, led by a 34% rise in international sales. (The period, however, includes an extra week compared to year earlier.)



Same-store sales were flat for the namesake chain, down 2% at Hollister and down 3% abroad.



Abercrombie changed its method of accounting for inventory in the fourth quarter. Previously, the retailer valued inventory based on its weighted average cost and initial retail selling price, then recorded charges to the cost of goods sold when the selling price was reduced. In the new system, Abercrombie doesn’t reduce the value of inventory unless it expects to sell the merchandise below its original cost.



Net sales for the fifty-three weeks ended Feb. 2, 2013, increased 8% to $4.511 billion from $4.158 billion for the fifty-two weeks ended Jan. 28, 2012.



Comparable sales for the full year increased 1% for the U.S., with same- store sales decreasing by 1% and comparable direct-to-consumer sales up 15%. Comparable sales for the full year decreased 8% for international, with comparable store sales decreasing by 19% and comparable direct to consumer sales up 46%.



In fiscal 2013, the company expects to open Abercrombie & Fitch flagship locations in Seoul and Shanghai, as well as approximately 20 international Hollister stores throughout the year. It expects to close approximately 40-50 stores in the U.S. during 2013, primarily through natural lease expirations.



Based on current new store plans and other planned expenditures, Abercrombie expects total capital expenditures for fiscal 2013 to be approximately $200 million, predominately related to new stores and investments in IT initiatives.