WWD.com/business-news/financial/2q-results-decline-from-year-ago-1717810/
government-trade
government-trade

A&F 2Q Results Decline From Year Ago

Despite drop in 2Q profits, results still beat analysts' expectations.

Slowed consumer spending tripped up teen apparel retailer Abercrombie & Fitch Co., which on Friday posted a 4.2 percent dip in second-quarter profits, but the results still beat analysts’ expectations.

This story first appeared in the August 18, 2008 issue of WWD.  Subscribe Today.

For the quarter ended Aug. 2, the company reported income of $77.8 million, or 87 cents a diluted share, compared with income of $81.3 million, or 88 cents a share, for the same year-ago period. Revenue was up 5.1 percent to $845.8 million, versus $804.5 million for the prior-year period last year. Analysts polled by Yahoo Finance expected earnings of 86 cents a share on revenues of $851.4 million.

Total comparable-store sales for all divisions were down by 4 percent, which included a 3 percent comps gain at core Abercrombie & Fitch stores. Comps at Hollister were down by 9 percent, while Ruehl had a decline of 22 percent.

For the six months, the New Albany, Ohio-based retailer saw income fall 1 percent to $139.9 million, or $1.55 a diluted share, from $141.4 million, or $1.53, a year ago. Sales rose 6.4 percent to $1.65 billion, from $1.55 billion.

“Our second-quarter financial results reflect difficult macroeconomic conditions and a significant slowdown in consumer spending,” said Michael Jeffries, chairman and chief executive officer. “However, we see these challenging times as a great opportunity to place more distance between us and the rest of specialty retail. We remain firmly committed to the aspirational positioning of our brands and to building the foundation that supports us as a truly multinational business.”

“Abercrombie’s priorities are strategically focused and should serve the company well in the long-term,” said retail analyst Jennifer Black of Jennifer Black & Associates. “Abercrombie is in the midst of a transition from a company geared domestically in terms of sales to a truly international company. By the end of 2009, Abercrombie intends to have 15 total stores in the various formats in Canada. As well, flagships in Copenhagen and Japan should come on board to join the London flagship.”

For the second half of the year, the company anticipates diluted earnings per share of between $3.40 and $3.45, and for the full year, it expects diluted EPS in the range of $4.95 to $5.