Abercrombie Plunges Amid Disappointing Earnings, Lowers Guidance
NEW YORK (TheStreet) - Abercrombie & Fitch
While the loss was better than what the New Albany, Ohio-based company reported a year earlier - a net loss of $21.3 million or 25 cents a share - Wall Street had forecast Abercrombie to post a net loss of 5 cents a share on revenue of $941.6 million.
The stock was plummeting more than 7% to $50.50 in premarket trading.
"Our results for the first quarter reflect a 16-cent improvement in earnings per share versus last year, including better than expected gross margin rate improvement and tight expense management," Chairman and CEO Mike Jeffries said in the earnings statement. "The first quarter proved to be more difficult than expected on the top-line due to more significant inventory shortage issues than anticipated, added to by external pressures."
"However, comparable sales trends progressively improved during the quarter and with the inventory headwinds largely behind us, we expect to see continued sequential improvement in the second quarter," Jeffries added. "We are also making good progress on our cross-functional initiatives, which we expect will generate substantial operating margin improvement on a sustainable, long-term basis."
Abercrombie's net sales for the quarter fell 9% to $838.8 million compared to the year before. Total U.S. sales, which include direct-to-consumer sales, decreased 17% to $534.9 million.
Total comparable sales for the quarter decreased 15%. Comparable store sales fell 17%, while online comparable sales fell 6%, the company said.
Pitted against consumer outrage over resurfaced comments Jeffries made seven years ago about why the teen retailer doesn't make its clothing in large sizes, Abercrombie issued an apology earlier this week and pledged to take steps to show their commitment against bullying as well a more welcoming store culture.
Also see: Abercrombie Forced To Apologize