US: Abercrombie & Fitch swings to Q3 loss
Teen apparel retailer Abercrombie & Fitch Co has swung to a third quarter loss on a double-digit drop in sales and costs linked to the restructuring of its Gilly Hicks business.
The retailer reported a loss of $15.6m in the three months to 2 November, compared with a profit of $84m the year before.
But stripping out $44.7m in charges related to restructuring plans for Gilly Hicks, along with another $43.6m in store asset impairment charges, adjusted net income was $40.5m, it said.
The retailer earlier this month revealed plans to shutter all of its standalone Gilly Hicks stores by the end of the first quarter of fiscal 2014, as part of a restructuring of the intimate apparel brand.
"Our results for the third quarter reflect weakness in top-line performance, which we expect to continue in the fourth quarter," noted CEO Mike Jeffries.
"However, we continue to work hard to offset these conditions and are aggressively pursuing initiatives we believe will improve the sales trend as we go forward."
During the quarter, net sales were down 12% to $1.03bn, from $1.17bn the year before. US sales fell 18% to $674.9m, while international sales were up 2% to $358.4m.
Comparable sales dropped 14%, with those in the US down 14% and international comparable sales tumbling 15%. By brand, comparable sales fell 13% for Abercrombie & Fitch, dropped 4% for Abercrombie Kids, and were down 16% for Hollister Co.
The gross profit rate for the three-month period fell 130 basis points to 63.0%, including inventory write-downs associated with Gilly Hicks.
Based on a projected low double-digit decline in comparable sales for the fourth quarter, Abercrombie & Fitch maintained its outlook for full year earnings per diluted share to be in the range of $1.40 to $1.50.
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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....
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