By  on August 16, 2006

Abercrombie & Fitch posted a 14.5 percent jump in second-quarter earnings on Tuesday, beating Wall Street's expectations by 1 cent.

For the three months ended July 29, income leaped to $65.7 million, or 72 cents a diluted share, from $57.4 million, or 63 cents, in the same year-ago period. Analysts expected earnings of 71 cents per share, according to Thomson First Call. Sales were up 15.2 percent to $658.7 million from $571.6 million, but same-store sales were flat compared with a 30 percent increase in 2005.

For the six months, income climbed 24.8 percent to $122 million, or $1.34 a diluted share, from $97.8 million, or $1.07, a year ago. Sales rose by 17.7 percent to $1.32 billion from $1.12 billion a year ago.

"I am very pleased with the record sales and profits that we achieved this quarter. Enhancing the quality of our brands and increasing the bottom line are our top priorities; to generate strong sales, gross margin and earnings reflect the strength of our business," Mike Jefferies, ceo and chairman of the board, said in a statement.

During the second quarter, the gross margin rate was 69.1 percent, up 90 basis points from last year, due to a lower markdown rate combined with a slightly higher initial markup versus last year.

By brand, the Abercrombie & Fitch division saw a 3 percent increase in sales to $316.3 million, while comps decreased 4 percent. At abercrombie, sales climbed 14 percent to $72.7 million, and same-store sales rose 11 percent. Sales at the Hollister division surged 32 percent to $262.9 million, with a 3 percent increase in sales for stores opened at least a year. Ruehl's sales increased 139 percent to $6.9 million, with a 24 percent hike in comps.

The company expects earnings per share for the second half of the year to be in the range of $3.15 to $3.20 and between $4.49 and $4.54 for the full year. In addition, capital expenditures for the year are expected to be between $400 million and $420 million, with approximately $260 million allocated to store construction, remodels, conversions and improvements in existing stores. The remainder will go to investments at the home office and distribution center.Abercrombie & Fitch plans to add 74 Hollister stores, 18 abercrombie stores, eight Abercrombie & Fitch stores and seven Ruehl locations.

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