Abercrombie & Fitch Co. ANF today
reported on the Company's performance for the quarter ended November 2, 2013
and provided an updated full year outlook.
Net sales for the thirteen weeks ended November 2, 2013 decreased 12% to
$1.033 billion from $1.170 billion for the thirteen weeks ended October 27,
2012.
Total comparable sales for the quarter, including direct-to-consumer sales,
decreased 14% with comparable U.S. sales decreasing 14% and comparable
international sales decreasing 15%. Total direct-to-consumer comparable sales
increased 11% for the quarter. Third quarter comparable sales are compared to
the thirteen-week period ended November 3, 2012.
For the third quarter, the Company expects to incur pre-tax charges in the
aggregate of approximately $90 million - $100 million related to its
restructuring plans for the Gilly Hicks brand (as discussed below), non-cash
impairment charges related to other stores, and charges related to the
Company's profit improvement initiative. Excluding these charges, the Company
expects to report adjusted non-GAAP earnings per diluted share at the higher
end of prior non-GAAP guidance of $0.40 to $0.45. This expectation now
reflects lower sales and gross margin rate than anticipated offset by expense
and other favorabilities. Pending finalization of the material charges
mentioned above, the comparable U.S. GAAP earnings per share figure is not
available at this time, but will be available when earnings are released on
November 21, 2013.
Based on a projected low double digit decrease in comparable sales for the
fourth quarter, the Company expects full year adjusted non-GAAP earnings per
diluted share to be in the range of $1.40 to $1.50. This projection also
assumes significant gross margin rate erosion in the fourth quarter as the
Company clears through excess inventory.
The guidance for the full year does not include charges related to the
Company's restructuring plans for the Gilly Hicks brand, other impairment and
store closure charges, charges related to the implementation of the Company's
profit improvement initiative, or the effect of any additional share
repurchases.
Mike Jeffries, Chief Executive Officer and Chairman of the Board of
Abercrombie & Fitch Co., said:
"Our results for the third quarter reflect continued top-line challenges, with
overall spending among younger consumers remaining weak. Until we have seen a
clear trend improvement, we are continuing to take a cautious approach into
the fourth quarter and are working to end the year with appropriate levels of
fall carryover inventory.
During the quarter, we completed our long-term strategic review, and believe
that we now have a clear roadmap for sustainable growth in sales,
profitability and return on invested capital. We look forward to sharing the
results of our review in our analyst meeting."
The Company will host an analyst meeting to discuss the results of its
long-term strategic review on Wednesday, November 6, 2013. A live webcast of
the analyst meeting will also be accessible under the "Investors" section of
the Company's website at www.abercrombie.com at 8:30 AM, Eastern Time.
Gilly Hicks Update
The Company also announced that it plans to close all of its stand-alone Gilly
Hicks stores. The Company expects to substantially complete the closures by
the end of the first quarter of Fiscal 2014. Store closures in Europe are
subject to applicable notice and consultation provisions. The Company will
continue to offer Gilly Hicks branded intimate apparel through its Hollister
stores and direct-to-consumer business.
Mike Jeffries said:
"In connection with our long-term strategic review, we have decided to focus
the future development of the Gilly Hicks brand through Hollister stores and
direct-to-consumer channels. This decision reflects the successful pilot of
selling Gilly Hicks branded intimates in Hollister stores. As a result, we
have made the determination to close our stand-alone Gilly Hicks stores. We
believe it is critical to focus our efforts and resources where we have the
greatest opportunities to drive profitable growth for our brands."
The Company estimates that it will incur pre-tax charges of approximately $90
million, including approximately $40 million of non-cash impairment charges
and approximately $50 million of lease-related, severance and other charges.
The Company expects the charges to be substantially recognized in the third
and fourth quarters of Fiscal 2013 and the first quarter of Fiscal 2014. The
Company also estimates that the net cash outflow associated with the Gilly
Hicks store closures, prior to any associated tax benefits, will be
approximately $55 million. These estimates are based on a number of
significant assumptions and could change materially.
Excluding the above-referenced charges, the Company anticipates that its Gilly
Hicks operations will incur a pre-tax loss of approximately $30 million in
Fiscal 2013. As a result of the store closures and reductions in overhead
expenses, the Company expects the brand to operate on approximately a
break-even basis in Fiscal 2014.
Market News and Data brought to you by Benzinga APIs© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Loading...
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in