By  on May 24, 2007

Despite a tough spring season for apparel retailers, Abercrombie & Fitch posted a 6.9 percent earnings gain for the first quarter on a 12.9 percent sales increase.

After the market closed, the company said net income rose to $60.1 million from $56.2 million in the same period a year ago, on sales that increased to $742.4 million from $657.3 million from the year-ago period. Earnings per share for the quarter increased to 65 cents per diluted share from 62 cents. Total same-store sales for the quarter declined 4 percent.

Even with the quarterly comps decline, the retailer managed to increase the gross margin rate by 20 basis points to 65.6 percent, a shift the company attributed to an improvement in initial markup partially offset by a higher margin markdown rate last year. The company's operating income for the quarter came in at $92.7 million, up 10 percent from last year's $84 million.

"Our first quarter financial results reflect the strength of our business strategy and the execution of our plan. Despite difficult selling conditions that impacted most retailers during this period, we enhanced each of our brands while delivering record profit. We manage variable expenses to increase profit for the quarter. We continue to grow our business for the long term by opening in new markets and developing new concepts, while achieving our goal of delivering strong short-term results as we continue to build for the future," said Mike Jeffries, chief executive officer and chairman of Abercrombie & Fitch, in a statement.

Abercrombie & Fitch reaffirmed its guidance for the second quarter, forecasting net income per share between $1.47 and $1.52 for the first half of the year. That range would be a 10 to 13 percent increase over the first half of last year.

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