Abercrombie & Fitch Co. posted sharply lower fourth-quarter profits as its revenues declined in both the quarter and the full year.
In the three months ended Feb. 1, net income was $66.1 million, or 85 cents a diluted share, 58 percent below the $157.2 million, or $1.95, logged in the final quarter of 2012. Adjusted net income, eliminating charges associated with the closure of the Gilly Hicks division and other initiatives, was $1.34 a share, 31 cents better than the most recent estimates of analysts.
Revenues declined 11.5 percent to $1.3 billion from $1.47 billion in the year-ago period. Comparable sales in the quarter were down 8 percent, with a 16 percent drop in same-store sales offset by a 24 percent increase in direct-to-consumer sales. Gross margin fell to 59 percent of sales from 63.4 percent in the fourth quarter of 2012.
“For the fourth quarter, we are pleased that results exceeded expectations coming into the quarter,” said Mike Jeffries, chief executive officer. “Sales from our direct-to-consumer business were particularly strong, representing nearly 25 percent of sales for the quarter, we saw sequential improvement in our comparable-store sales trend, and continued to see strong results in China and Japan.Additionally, we managed expense well, including accelerating savings from our profit improvement initiative.”
For the full year, net income declined 77 percent to $54.6 million, or 69 cents a diluted share, from $237 million, or $2.85, in 2012. Revenues declined 8.7 percent to $4.12 billion from $4.51 billion.
Initial profit guidance for 2015 was set at between $2.15 and $2.35 a diluted share, excluding nonrecurring charges, with a high-single-digit decline in same-store sales and an increase of about 20 percent in direct-to-consumer sales.