Abercrombie’s Q4 profit plunges 58% but still tops Street; accelerates buyback

New Albany, Ohio – Abercrombie & Fitch Co.'s fourth-quarter net income plunged 58%, less than Wall Street expected, amid several one-time charges, including costs tied to the closure of its Gilly Hicks’ stores. The company’s board also approved a $150 million accelerated share repurchase plan, to be executed during the first quarter.



For the quarter ended Feb 1, Abercrombie’s income fell to $66.1 million from $157.2 in the year-ago period. For the full year, income declined 77% to $54.6 million from $237 million last year.



Net sales dropped 12% to $1.3 billion during the quarter. Same-store sales, including direct-to-consumer sales, fell 8%. By brand, same-store sales fell 6% for Abercrombie & Fitch, were down 8% for Abercrombie Kids and down10% for Hollister Co.



For the full fiscal year, sales declined 9% to $4.11 billion.



The retailer said it anticipates opening 16 full-price international stores throughout fiscal 2014, including an Abercrombie & Fitch flagship store in Shanghai in April 2014 and a small number of namesake mall-based stores.



In addition, the company plans to open a small number of international and U.S. outlet-based stores during the fiscal year. The company also expects to close approximately 60 to 70 stores in the U.S. during the fiscal year through natural lease expirations.



Abercrombie & Fitch cited the closure of 24 Gilly Hicks stores in the fourth quarter, as well as other asset impairment charges and charges related to its profit improvement initiative, as significantly reducing its reported net income.



“2013 was a challenging year, with sales and earnings falling well short of the objectives we set at the beginning of the year,” said Mike Jeffries, CEO of Abercrombie & Fitch. “After three years of positive growth in our combined U.S. chain stores plus direct-to-consumer comparable sales metric, that metric turned negative in 2013 against the backdrop of a challenging retail environment, particularly in the teen space. It is important that we return to positive growth, particularly in our core U.S. business, and the steps we are taking as we execute against our long-range strategic plan should put us in a position to achieve this goal.”