NEW YORK — Casual apparel retailer Abercrombie & Fitch said new stores and inventory and expense reductions paved the way for higher second-quarter income despite a decrease in same-store sales.
For the three months ended Aug. 3, net income for the New Albany, Ohio-based operator of 533 apparel specialty stores rose 24.4 percent to $31.1 million, or 31 cents a diluted share, 4 cents above Wall Street’s already raised expectations. In last year’s quarter, A&F reported income of $25 million, or 24 cents. Overall sales rang in an additional 17.5 percent, hitting $329.2 million from $280.1 million in the corresponding period last year. However, sales were down 5 percent on a comparable-store basis.
Mike Jeffries, chairman and chief executive, said on an afternoon conference call that the early back-to-school sales in July were helped by the company’s decision to offer more wear-now merchandise for the selling season rather than more traditional fall merchandise like sweaters.
Jeffries noted Hollister sales were strong in the quarter as sales per square foot in the 60-unit California-inspired chain were over 80 percent of those at A&F.
A&F said last week that, based on better-than-expected sales results and its continued emphasis on margin improvement and inventory and expense controls, it expected to exceed the First Call EPS estimates for the just-concluded quarter of 26 cents. Analysts followed by raising their expectations by a penny.
Looking ahead, Seth Johnson, chief operating officer, said A&F is comfortable with First Call’s third and fourth quarter forecasts of 49 cents and 85 cents, respectively, bringing yearly EPS to $1.88, versus $1.65 in 2001.
For the first half of the year, net income was up 19.3 percent to $54.4 million, or 53 cents, compared with year-ago income of $45.6 million, or 44 cents. Sales increased 18 percent to $641.9 million from $543.8 million last year, while comps decreased 6 percent.