Abercrombie & Fitch
Co. reported net sales declined 5 to 7 percent in the fourth quarter, bettering a previous forecast of 5 to 10 percent down.
The specialty retailer said the forecast reflected ongoing digital momentum offset by store closures and capacity restrictions in North America and EMEA (Europe, Middle East and Africa).
In the third quarter of 2020, the company reported net sales of $820 million, down 5 percent from last year’s $863.5 million, but above expectations.
For the fourth quarter, the gross profit rate is seen up at least 130 basis points compared to last year’s 58.2 percent versus plan of flat to up slightly, benefiting from reduced depth and breadth of promotions and markdowns relative to plan and to last year.
Operating expense, excluding other operating income, is seen down at least 2 percent from fiscal 2019 adjusted non-GAAP operating expense of $566 million, reflecting savings in store expenses due to closures and the recognition of rent abatements. This compares to plan of up 1 to 2 percent.
“I am proud of our quarter-to-date performance, including the peak holiday selling period,” said Fran Horowitz, A&F’s chief executive officer, on Monday afternoon.
“Customers continue to respond favorably to updated product and messaging, and we expect lower promotional depth and breadth to drive gross profit rate expansion in the quarter. Our digital sales continue to be robust, partially offsetting ongoing store challenges, where we have experienced reduced hours of operation, capacity restrictions and closures in EMEA and North America.
“Looking ahead, we will remain focused on controlling what we can, including tightly managing inventories and expenses. At the same time, we will continue to pivot to quickly address and respond to those external situations that are beyond our control. We are in the fortunate position of entering 2021 from a position of brand and financial strength. We are successfully navigating this unprecedented environment, while keeping the health and safety of our associates, customers and communities a top priority, and executing on our key strategies. I am confident in our ability to build on recent global learnings and successes across our brands and look forward to sharing additional details on our upcoming fourth quarter call.”