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Abercrombie swings to loss in Q2 but still tops Street

8/26/2015

New Albany, Ohio – Efforts to change its merchandising and branding paid dividends at Abercrombie & Fitch Co., which reported smaller net loss and revenue decline than expected in the second quarter of fiscal 2015.



Abercrombie reported a net loss of $810,000, compared to net income of $12.9 million the same quarter a year earlier.



Revenue fell 9% to $817.8 million, from $890.6 million.



Total company same-store sales dropped 4%. Abercrombie same-store sales fell 7% and Hollister same-store sales fell 1%, below Wall Street’s expected rate of decline.



Abercrombie plans to open 15 full-price stores in fiscal 2015 in the key growth markets of China, Japan and the Middle East, six full price stores in North America and 10 new outlet stores in the U.S.



In addition, the company anticipates closing approximately 60 stores in the U.S. during the fiscal year through natural lease expirations.



Abercrombie has been tinkering with its assortment and branding this year with efforts including getting rid of shirtless models in stores and sexualized advertising, as well as de-emphasizing logos on its clothing and offering trendier styles. The retailer also hired a new brand leadership team last week.



"In our second quarter, we delivered a meaningful sequential improvement in comparable sales, stabilized gross margins and achieved significant expense reductions,” said Arthur Martinez, executive chairman. “Our results exceeded what we signaled in our first quarter earnings call and give us confidence that we are on the right track, although we recognize that we still have much to achieve.”



Abercrombie expects further same-store sales improvement for the rest of fiscal 2015, especially in the fourth quarter.


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