NEW YORK — Youth-oriented specialty retailer Abercrombie & Fitch said Tuesday that new stores, margin protection and expense controls helped it lift its bottom line 8.7 percent during the third quarter.

The New Albany, Ohio, based retailer, which operates 560 A&F and Hollister stores, said for the three months ended Nov. 2, net income rose to $47.7 million, or 48 cents a diluted share, ahead of its expectations and 2 cents above already raised consensus estimates. In last year’s quarter, A&F reported income of $43.9 million, or 43 cents. Net sales increased 18.3 percent to $419.3 million from $354.5 million, but decreased 5 percent on a comparable-store basis, with women’s sales outperforming men’s. This quarter marks A&F’s 41st consecutive quarter of earnings growth.

Mike Jeffries, chairman and chief executive, said on an afternoon conference call to Wall Street analysts that A&F will continue to focus on key elements that drive the bottom line, specifically margin protection and expense control.

Regarding Hollister, its new California-themed division aimed at a younger audience than A&F, Jeffries said he is pleased with its sales per square foot, which are running 93 percent of the adult A&F stores within the same mall. "We are on track to get it as productive, if not more productive, as A&F," he said, adding that 80 new Hollisters will be added to the fleet next year.

Regarding the promotional environment for the holiday season, Jeffries said that while the company is going to protect itself with a promotional strategy, he is not counting on it to drive the business in the fourth quarter. "We are really more interested in new fashion, more often than competing at any kind of price level," he said. "That is our strategy."

Year-to-date net income increased 14.1 percent to $102.1 million, or $1.01 a diluted share, versus $89.5 million, or 87 cents. Sales increased 18.1 percent to $1.06 billion from $898.3 million last year, but decreased 5 percent on a comp basis.

Last week, A&F, along with American Eagle and Aeropostale, said based on October sales results, it expected to exceed previous earnings guidance.Reiterating the fourth-quarter earnings forecast of 79 cents a share, Seth Johnson, the firm’s chief operating officer, said on the call that, based on the continued uncertain economic environment, as well as the shortened holiday selling season, A&F is cautious in its expectations. "This change will have a significant negative impact on November comps," he said. "This limits our ability to achieve significant earnings growth."

To access this article, click here to subscribe or to log in.

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus