Trendy clothing retailer Abercrombie & Fitch Co said today that its third-quarter profit has dropped following the settlement of three related class-action racial discrimination lawsuits.

The retailer reported a net income decrease to $40.1 million for the quarter ended 30 October, down from $50.5m.

Abercrombie & Fitch said the last quarter included a settlement in which the company must pay a total of nearly $50m to defendants and for attorney's fees, costs and expenses.

The charges for the settlement caused an income drop in the quarter of 22 cents a share.

The lawsuits alleged that the company tended to take on ethnic minorities for 'behind the scenes' jobs such as overnight shifts and stockroom duties, but that sales positions were not offered to them.

Net sales in the quarter rose17 per cent to $520.7m from $445m for the year-ago quarter. Comparable store sales increased 1 per cent in the quarter.