US: Abercrombie & Fitch lowers FY outlook
By Katie Smith | 2 August 2012
- Company lowers full-year earnings outlook
- Comparable store sales fall 10%
- US same-store sales drop 5%
Teen-apparel retailer Abercrombie & Fitch has lowered its full-year earnings forecast after second quarter sales at stores open at least a year fell 10%.
Net sales for the quarter ended 28 July climbed 4% to $951.4m. Total US sales declined 5% to $648m, with this partially offset by a 31% jump in international sales to $303.4m. Total direct-to-consumer sales, including shipping and handling, increased 25% to $127.7m.
But comparable store sales fell 5% in the US and declined 26% in international markets.
Abercrombie & Fitch now expects its second-quarter gross margin rate to fall by around 100 basis points compared to last year. It also forecasts inventory at cost to be up 20% at the end of the quarter.
"Macroeconomic conditions remained very challenging during the quarter, particularly in Europe but also increasingly in the US," said Mike Jeffries, CEO and chairman.
"In that context, we will continue to be highly disciplined in our new store approval process and only commit to stores where we are confident they are likely to generate a stronger return than alternative uses of cash," he added.
"We believe this has clearly been the case for the international investments we have made to date, as our international stores remain much more productive and much more profitable than our US fleet. However, given recent trends, particularly in Europe, we believe it is appropriate to revise our plans in response."
The company sees full-year earnings per share in a range from $2.50 to $2.75, compared to earlier guidance of $3.50 to $3.75 per share.
Sectors: Apparel, Finance, Retail
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