Abercrombie’s loss widens, but results still top expectations

New Albany, Ohio – Abercrombie & Fitch Co. reported a net loss of $23.7 million in the first quarter of fiscal 2014, up from $7.2 million in the year-ago period, but less than analysts had expected. Restructuring charges associated with the closure of Abercrombie’s Gilly Hicks stand-alone stores, as well as the impact of heavy discounting on profit margins, helped drive the retailer’s net loss growth. The chain backed its full-year forecast as demand in its female business improved and sales fell less than expected for the first time in six quarters.



Abercrombie’s net sales fell 1.9% to $822.4 million, well above Wall Street’s average estimate of $796.3 million. Same-store sales declined 4%.



Same-store sales by brand, including direct-to-consumer, decreased 1% for Abercrombie & Fitch, decreased 6% for abercrombie kids, and decreased 7% for Hollister Co.



"In what remains a difficult teen retail environment, we are pleased that earnings for the quarter were in line with our expectations,” said Mike Jeffries, CEO. “Overall sales for the quarter decreased 2%, which included strong growth in our direct-to-consumer business. In addition, comparable sales continued to head in the right direction, and included significant sequential improvement in our female business and our Abercrombie & Fitch brand as a whole.”



Looking ahead, Abercrombie anticipates opening 15 full-price international stores throughout the year, including a small number of Abercrombie & Fitch international mall-based stores. The company also now plans to open approximately eight-to-10 international and U.S. outlet stores during the fiscal year. In addition, Abercrombie continues to expect to close approximately 60-to-70 stores in the U.S. during the fiscal year through natural lease expirations.



Abercrombie also plans an expanded roll-out of its updated Hollister store format, which it has been testing since January of this year. The company now anticipates that the updated design will be rolled out in 75-to-100 stores by the end of the current fiscal year.