Teen apparel retailer Abercrombie & Fitch Co is to shutter 60 stores this year after steep discounting in the second quarter ate into the company’s gross margin.
The New Albany, Ohio based retailer, which operates 1,098 stores, is also cutting back the number of international Hollister stores it plans to open in fiscal 2010, down to 20 from earlier estimates of 25.
The moves are planned despite a swing to a profit of $19.5m or $0.22 per share for the three months to 31 July – which includes an impairment charge of $0.02 per share relating to expected store closures. In the second quarter of last year the company filed a loss of $26.7m or $0.30 a share.
Quarterly sales rose 17% to $745.8m from $637.2m, with direct-to-consumer sales up 50% to $69.0m and same-store sales up 5%. Domestic sales rose 8% to $612.6, and international revenues soared 85% to $133.2m.
By division, the company said comparable store sales increased 8% at Abercrombie & Fitch, rose 3% at Abercrombie Kids, and were up 2% at Hollister Co.
But gross profit rate for the quarter was down by 150 basis points to 65.1%.
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By GlobalDataNevertheless, CEO Mike Jeffries said: “We are pleased with the progress we are making as we pursue our strategy of leveraging the international appeal of our iconic brands to build a highly profitable, sustainable, global business.”
