Abercrombie & Fitch; Shares Diving Despite Strong Sales (ANF)

Abercrombie & Fitch (NYSE: ANF) reported better than expected August same-store-sales this morning. Analysts had expected a gain of 5.9% in August sales, and Abercrombie reported a slight beat, reporting a gain of 6% in stores open at least one year.

So why are shares falling into a ditch today?

Abercrombie, which was renowned for never cutting prices and offering discounts, used heavy promotions and discounts to drive store traffic in August.

Abercrombie had a generous 40% off discount on a good portion of its merchandise, and this will hurt gross margins in the third quarter.

So despite the slightly better than expected sales report for August, shares are getting hit hard today.

Volume is exceptionally strong today, having already traded over 6.8 million shares. The average daily volume for Abercrombie is just under 3.8 million shares.

Abercrombie is down $1.74 on the day, for a loss of 4.76% to $34.84.

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