Abercrombie & Fitch Co. saw its shares soar more than 10 percent Friday as a 39.3 percent decline in third-quarter profits still left it comfortably ahead of Wall Street estimates.
The New Albany, Ohio-based firm said for the three months ended Oct. 31, net income slid to $38.8 million, or 44 cents a diluted share, from $63.9 million, or 72 cents, in the year-ago quarter. Excluding extraordinary items, the company earned 30 cents a share in the most recent quarter, well ahead of the 20 cent profit consensus provided by Yahoo Finance.
Net sales fell 14.6 percent, to $765.4 million from $896.3 million, and were off 22 percent on a comparable-store basis.
The company said international store sales were roughly $61 million for the quarter and that further expansion outside the U.S., combined with lower price initiatives, would help it regain its top-line momentum.
Despite the rough sales record, investors lifted the retailer’s shares $3.92, or 10.7 percent, to $40.68. The stock established a new 52-week high of $40.95 in intraday trading.
By division, A&F, which posted sales of $324.3 million, had an 18 percent decrease in comps, as its West Coast-inspired concept Hollister & Co. registered revenue of $333.4 million and a 26 percent drop in comps. The chain’s children’s brand, abercrombie, brought in sales of $90.8 million and a 22 percent comp dip, while Ruehl, the company’s collegiate concept to be shuttered at the end of the fiscal year, reported sales of $11.7 million and a comp decline of 30 percent.
For the nine months, the retailer swung to a loss of $47.2 million, or 54 cents a diluted share, versus a profit of $203.8 million, or $2.27 a share. Revenue for the period contracted 20.3 percent to $2.03 billion.
“We are aspirational brands for our customer, but are reacting to the current environment and trying to improve the domestic sales trend,” said chairman and chief executive officer Michael Jeffries on the company call. “Domestically, as you all know, we’re seeing that the customer is extremely deal driven, price conscious, and we are aware of that. Our strategy has been to increasingly offer specially targeted attractive price points…our brands, again as you know, are not positioned to compete on price and price alone and it is not our desire to change that.”
Although Jeffries admitted “the future of our business is tied to international growth,” the company’s domestic positioning is also related. The ceo said the company would strengthen its inventory position, as well as its marketing for the spring. Additionally, the firm said it would offer specially targeted price points, particularly at Hollister, and would evaluate its domestic real estate footprint, notably at A&F, while working to improve its fashion content across all its brands.
Nonetheless, Jonathan Ramsden, executive vice president and chief financial officer, said in the next few weeks, “it’s going to continue to be a very aggressive and promotional environment,” and average unit retail is expected to be “down a good bit compared to the fourth quarter of last year.”
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty