US: Abercrombie & Fitch Q3 profit jumps 40.5%
- Q3 net income surges 40.5% to $71.5m
- Net sales rose 9% to $1.17bn from $1.08bn
- Comparable store sales fell 3% in the quarter
Improvements in both its domestic and international businesses have helped Abercrombie & Fitch Co to a 40.5% jump in third quarter profit, the teen-apparel retailer said today (14 November).
Net income surged to $71.5m or $0.87 per share in the three months to 27 October, up from $50.9m last year.
Net sales rose 9% to $1.17bn from $1.08bn, with US sales flat at $818.6m and international sales surging 37% to $351.1m.
Total company direct-to-consumer sales increased 20% to $158.3m, with a 15% rise in US sales and a jump of 31% internationally.
Comparable store sales fell 3% in the quarter, with a drop of 4% for Abercrombie & Fitch, 3% for Abercrombie Kids, and 1% for Hollister Co.
Lower average unit costs contributed to a 240 basis points rise in gross profit rate to 62.5%.
"These significantly improved financial results reflect progress on several fronts over the past quarter," said CEO Mike Jeffries.
"Our US chain store business posted healthy growth on top of a strong quarter a year ago, and we saw sequential trend improvement in our international business."
The results are in contrast to its second quarter, when the retailer saw net profit fall 51.6% on slower sales in its international stores and the first drop in US same-store sales for three years.
It had earlier earmarked a further 180 underperforming stores to close over the next few years to improve efficiency and reduce expenses - on top of the 135 stores closed in the past two years.
And in September Abercrombie & Fitch hired investment banking firm Goldman Sachs to fend off pressure from investors.
The retailer, which operates a total of 1,067 stores, now says it expects full year earnings per share of $2.85 to $3.00, based on a mid single digit percentage drop in fourth quarter same-store sales.
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