Abercrombie & Fitch Q3 Profit Beats Expectations, Shares Jump

Shares of

jumped over 18 percent in pre-market trading after the company reported better-than-expected earnings for the third quarter. The New Albany, Ohio-based company reported quarterly net income of $41.9 million, or $0.60 per share, versus $18.2 million, or $0.25 per share, in the year-ago period. Excluding certain items, the company's adjusted earnings rose to $0.48 per share from $0.42 per share. Its net sales dropped 4 percent to $878.6 million. However, analysts were expecting earnings of $0.22 per share on revenue of $864.65 million. The average estimate among 85 Estimize users was for earnings of $0.20 per share and revenue of $867.14 million. Comparable sales shrank 1 percent for the third quarter. By brand, net sales slipped 6 percent to $411.3 million for Abercrombie, while sales for Hollister came in flat at $467.3 million. By geography, net sales fell 4 percent to $572.7 million in the U.S., while sales declined 3 percent to $305.8 million internationally. Marketing, general and administrative expense climbed to $117.7 million from $105.0 million. During the third quarter, A&F repurchased 2.5 million shares of its common stock at an aggregate cost of $50 million. A&F ended the third quarter with $601.5 million in inventory, a 3 percent drop compared to last year. During the quarter, A&F opened thirteen new stores and closed two stores. Arthur Martinez, Executive Chairman, said, "Our third quarter results exceeded our expectations coming into the quarter and provide the strongest validation yet that our initiatives are working. We have seen positive customer response to the actions we have been taking on a number of fronts. We saw continued sequential improvement in comparable sales, led by positive comparable sales for our Hollister brand and across our international business." For the fourth quarter, the company projects comparable sales to be approximately flat. A&F shares climbed 18.52 percent to $23.10 in pre-market trading.