Abercrombie & Fitch Q1 profit rises 7%

US: Abercrombie & Fitch Q1 profit rises 7%

By just-style.com | 24 May 2007

Youth apparel retailer Abercrombie & Fitch Co today (24 May) posted a 7% rise in first quarter profit, helped by better gross margins and tight control of variable expenses.

For the three months to 5 May, net income at the New Albany, Ohio-based company was $60.1m compared with $56.2m in the same quarter last year.

Total company sales increased 13% to $742.4m from $657.3m. Direct-to-consumer sales rose 43% to $43.5m but comparable store sales decreased 4% in the period.

Sales at Abercrombie & Fitch stores were up 7% to $333.3m, but decreased 4% on a same-store basis. abercrombie net sales increased 12% to $89.1m, although same-store sales fell 2%; Hollister Co net sales increased 19% to $309.7m but decreased 5% on a same-store basis; and Ruehl net sales increased 84% to $10.2m but its comparable store sales dropped 3%.

Mike Jeffries, chief executive officer and chairman of the board, said: "Despite difficult selling conditions that impacted most retailers during this period, we enhanced each of our brands while delivering record profit.

"We continue to grow our business for the long term by opening in new markets and developing new concepts, while achieving our goal of delivering strong short term results as we continue to build for the future."

Gross profit rate for the quarter was 65.6%, up 20 basis points compared to last year, helped by better initial mark-up but partially offset by a slightly higher markdown rate versus last year.

Net income per diluted share increased 5% to $0.65 compared to $0.62 for the first quarter of fiscal 2006.

The company reaffirmed previous earnings guidance for net income per diluted share for the first-half of fiscal 2007 to be in the range of $1.47 to $1.52, up 10% to 13% over last year.

Sectors: Apparel, Finance, Retail