By  on November 10, 2004

NEW YORK — Despite its caution for the fourth quarter and a disappointing third quarter, Abercrombie & Fitch Co. is taking a bullish stance for 2005 on expansion. It expects to roll out about 13 Ruehl stores and go international with other divisions.

Chief executive Mike Jeffries said on a conference call that he’s pleased with Ruehl so far, but added: “It is skewing a little older in age than we targeted, which I think is a very healthy business [and a] healthy proposition for that brand in terms of the potential size.”

Ruehl, which targets consumers aged 22 to 30, was launched in September and currently operates three units, in Paramus, N.J., Tampa, Fla., and Chicago. Additional Ruehl stores will be opened in Detroit, Columbus, Ohio, the Washington metropolitan area and Denver in the first half of 2005. Five to eight more stores are expected to open through the end of next year as well.

On the international front, the company is planning to enter Canada by the end of fiscal 2005. Executives told investors on the conference call that Canada is the first step in an eventual international expansion including Europe, Asia and possibly Latin America.

In the third quarter, the retailer was hit with a one-time charge from the settlement of three class action diversity lawsuits, which cut net earnings by about one-third. However, total sales rose 17 percent. In the period ended Oct. 30, Abercrombie earned $40.1 million, or 42 cents a diluted share, including a charge of $32.9 million, or 22 cents, due to settlements for the lawsuits. The quarterly earnings were down 20.5 percent from a profit of $50.5 million, or 51 cents, a year ago.

Total revenues in the quarter increased 17 percent to $520.7 million, from $445 million a year ago, including a sales increase at Hollister of 85 percent. Same-store sales increased 1 percent, including a 2 percent decrease at Abercrombie stores, a 3 percent decrease in its kids’ business and a 13 percent increase at Hollister.

In the first nine months of fiscal 2004, net income was $122.6 million, or $1.17, up 8.4 percent from $110.8 million, or $1.11, a year ago. Total revenues in the nine months increased 16.3 percent to $1.3 billion, from $1.2 billion a year ago.

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