UPDATE: Abercrombie & Fitch Q2 Sales Miss Estimates, Shares Tumble

Shares of Abercrombie & Fitch Co

dropped more than 5% in pre-market trading after the company reported downbeat second-quarter sales. The New Albany, Ohio-based company posted quarterly earnings of $12.9 million, or $0.17 per share, compared to $11.4 million, or $0.14 per share, in the year-ago quarter. Excluding certain itmes, Abercrombie & Fitch earned $0.19 per share. Its sales dropped 6% to $891 million. However, analysts were expecting earnings of $0.11 per share on revenue of $909.22 million. Abercrombie & Fitch's comparable sales for the quarter dropped 7%, versus analysts' expectations for a 4.1% decline. Comparable sales fell 1% for Abercrombie & Fitch, slipped 6% for abercrombie kids, and tumbled 10% for Hollister Co. The gross profit rate fell 180 basis points to 62.1%, while net other operating income fell to $4.3 million from $4.4 million. During the quarter, Abercrombie & Fitch repurchased 1.5 million shares at an aggregate cost of $60 million. It ended the quarter with $311 million in cash and cash equivalents and borrowings of $188 million. Abercrombie & Fitch now projects full-year earnings of $2.15 to $2.35 per share, versus analysts' estimates of $2.36 per share. Mike Jeffries, Chief Executive Officer said, "In the past quarter, we believe we have made great progress in evolving the fashion component of our assortment, and this progress is clearly evident in our Back-to-School presentation. In a continued challenging environment, our sales for the second quarter were somewhat below plan, but we have seen modest improvement since the Back-to-School floorset.” Abercrombie & Fitch shares dipped 5.27% to $41.87 in pre-market trading.