US: Abercrombie & Fitch Q4 profit slumps on charges
- Q4 net income down 58% to US$66.1m
- Sales fall 12% to $1.299bn
- Gilly Hicks closure to complete in Q1
Apparel retailer Abercrombie & Fitch reported a slump in fourth quarter profit, impacted by a series of charges related to asset impairments and the closure of its Gilly Hicks chain.
Sales were also down, with US revenues falling 13% in the quarter, and international sales declining 9%, while direct-to-consumer revenues rose 18%.
Gross profit fell 440 basis points to 59% in the three months to 1 February, thanks mainly to increased promotional activity.
For the full year, net profit was down 77% to $54.6m and sales fell 9% to $4.117bn.
CEO Mike Jeffries said it was a “challenging year, with sales and earnings falling well short of the objectives we set at the beginning of the year”.
He added: “After three years of positive growth in our combined US 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.”
Abercrombie & Fitch said the closure of its 24 Gilly Hicks stores was due to be completed by the end of the first quarter, with total charges of $90m, the remaining $8.5m of which will be incurred in the first quarter.
Despite the negative figures, analyst FBR Research highlighted a better than expected performance from the company, including expense reductions and better than expected international results.
“We would be buyers of ANF, as the company demonstrates that it can right-size its cost structure and there likely additional upside for 2014,” FBR said.
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