Abercrombie & Fitch Co. posted a wider first quarter loss, although it beat Wall Street’s revenue estimate and that was enough to send shares up 5.9 percent in pre-market trading.
For the three months ended April 29, the net loss was $61.7 million, or 91 cents a diluted share, versus a net loss of $39.6 million, or 59 cents, a year ago. Net sales slipped 3.6 percent to $661.1 million from $685.5 million. On a comparable-store basis, consolidated comps were down 3 percent. By business segment, comps at Hollister – including Gilly Hicks – were up 3 percent, but down 10 percent at Abercrombie, which includes the core Abercrombie brand and its Abercrombie Kids brand. By geographic region, sales were down 3 percent in the U.S. and down 2 percent internationally. The company said direct-to-consumer sales grew 27 percent of total company net sales for the first quarter, compared to 24 percent of total company net sales last year.
Wall Street was expecting a loss of 70 cents a diluted share on revenues of $651.3 million.
Fran Horowitz, chief executive officer, said, “We are encouraged by our progress across all brands, particularly in March and April as a whole, in an aggressively promotional environment. We are pleased with the performance of our largest brand, Hollister, as our strategic initiatives continue to deliver. Abercrombie comparable sales were in line with our expectations as continue to apply the learnings from Hollister’s successes.”
The ceo said the company’s focus on “closeness to our customers” enabled the team to adapt and execute better and faster, which in turn provided a “more consistent delivery of the right product at the right time, with the right brand voice and through the right brand experience.”
She said that for the second quarter, the company expects the retail environment to “remain promotional” and that “we expect results to improve further in the second half of the year, as we see returns from our strategic investments in marketing and omnichannel.” Horowitz noted that the international roll-out of full omnichannel capabilities, along with insights from multiple customer touchpoints online and in-store is helping the company meet the needs of its customers wherever they are, whenever they choose to shop.
“We continue to tightly manage costs and inventory and focus on execution to position our business for sustainable growth,” Horowitz added.
Shares of Abercrombie were trading at $13.65 at 9:19 a.m.
The company earlier this month said it is in talks with parties about a transaction for the company.