UPDATE: Abercrombie & Fitch Shares Fall On Downbeat Sales

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Abercrombie & Fitch Co.
ANF
reported in-line earnings for the fourth quarter, but the company's revenue missed analysts' estimates. The New Albany, Ohio-based company posted quarterly net earnings of $44.4 million, or $0.63 per share, compared to $66.1 million, or $0.85 per share, in the year-ago period. Excluding non-recurring items, the company's adjusted earnings came in at $1.15 per share. Its total sales dropped 14% to $1.12 billion. However, analysts were expecting earnings of $1.15 per share on revenue of $1.17 billion. US sales fell 10%, while international sales tumbled 20%. Same-store sales declined 10% in the quarter. By brand, comparable sales, including direct-to-consumer, fell 9% for Abercrombie & Fitch, slipped 6% for abercrombie kids, and tumbled 11% for Hollister. The gross profit rate rose 190 basis points to 60.9% for the quarter. Stores and distribution expense fell to $445.6 million from $505.6 million last year, while marketing, general and administrative expense climbed to $119.2 million from $118.6 million. Arthur Martinez, Executive Chairman, said, "2014 was a year of significant change for Abercrombie & Fitch. I believe these changes put us on the right path to improve profitability and deliver value to shareholders. Our sales for the fourth quarter were somewhat below expectations, but a slightly better gross margin rate and strong expense management enabled us to deliver EPS within our guidance range." "We expect the first half of 2015 to remain challenging, with declines in our logo business in 2014 persisting in the early part of 2015, but at reduced rates, as well as significant currency pressure. However, we believe that the benefits of all of the changes we have made will be reflected in improved performance in the second half of the year," Martinez added. Abercrombie & Fitch shares fell 6.84% to $22.35 in pre-market trading.
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