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Abercrombie & Fitch Shrinks on Dry Earnings, Unstylish Guidance

Abercrombie & Fitch Shrinks on Dry Earnings, Unstylish Guidance

Abercrombie & Fitch Co. (NYSE: ANF) has taken a nosedive on Friday after posting woeful first-quarter results and very weak 2013 guidance.

The New Albany, Ohio-based firm's net loss per share declined from $0.25 in Q1 2012 to $0.09, but missed the Wall Street consensus of $0.05.

Revenue dropped nine percent year-over-year to $838.77 million, falling drastically short of the $941.66 million analysts expected.

A&F, Hollister Unfashionable

The Abercrombie & Fitch and Hollister brands tanked during the quarter, with sales falling 13 and 18 percent, respectively. Abercrombie kids fell, as well, albeit by a more modest five percent.

Overall, comparable store sales plunged 17 percent while direct-to-consumer sales dipped six percent.

The lower sales are in line with the relatively cold winter and cool start to spring the US experienced in 2013, which drove down sales for numerous other clothing retailers. American Eagle (NYSE: AEO) reported decreased sales year-over-year, with CEO Robert Hanson laying part of the blame on “cooler weather causing soft demand for seasonal merchandise, all against warmer-than-normal weather and a strong performance last year.” And, even all-purpose big-box chain Target (NYSE: TGT) reported lower-than-expected first-quarter sales on Wednesday due partially to a weather-related decline in apparel sales.

Top competitor, The Gap (NYSE: GPS) bucked the trend, posting a 6.5 percent increase in sales on Thursday.

Unfashionable at Home, Stylish Outside

Abercrombie anticipates it will close 40 to 50 U.S. locations by the end of fiscal 2013, signaling declining demand for its products on the home front – at least via in-store customers.

However, the apparel chain expects its international presence to grow substantially. It plans to open 20 Hollister stores as well as a small number of multi-brand outlets abroad. The company also intends to launch flagship stores in Seoul and Shanghai during the year.

Second-Quarter Guidance Fits, 2013 Guidance Snug

Abercrombie expects second-quarter earnings of $0.28 to $0.33 per share, placing it on target to finish around the $0.31 analysts expect.

However, the lifestyle brand expects full-year earnings of $3.15 to $3.25, which would fall short of the $3.49 analysts want to see.

Stock Shrinks

After closing at an 18-month high of $54.37 on Thursday, Abercrombie has tanked on word of its weak first quarter and guidance. In early trading, the stock is down nearly 11 percent at $48.54.

Abercrombie & Fitch is down around seven percent on Friday.


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