Abercrombie Sinks on Rough Quarter
NEW YORK (TheStreet) - It was a barrel of fun trying to wade through the plethora of bad news coming from troubled teen retailer Abercrombie & Fitch
Shares slumped 5.5% to $36.20 in post-market trading after Abercrombie pre-announced dismal third-quarter earnings and sales as well as the decision to close all of the stores under Gilly Hicks, its intimate apparel and active wear brand.
The New Albany, Ohio-based company said that net sales for the 13 weeks ending Nov. 2 declined 12% to $1.03 billion compared to the year-earlier quarter.
Total comparable sales for the quarter, which includes direct-to-consumer sales, dropped 14%. U.S. comparable sales declined 14%. International comps were even worse, down 15%, Abercrombie said. Total direct-to-consumer comparable sales increased 11% for the quarter.
The company will still host an analyst meeting on Wednesday, which will be webcast live.
The poor sales follow a difficult summer. Abercrombie reported in August that earnings were challeged by soft traffic.
"Our results for the third quarter reflect continued top-line challenges, with overall spending among younger consumers remaining weak," Chairman and CEO Mike Jeffries said in a statement. "Until we have seen a clear trend improvement, we are continuing to take a cautious approach into the fourth quarter and are working to end the year with appropriate levels of fall carryover inventory."
"During the quarter, we completed our long-term strategic review, and believe that we now have a clear roadmap for sustainable growth in sales, profitability and return on invested capital. We look forward to sharing the results of our review in our analyst meeting," Jeffries added.
Abercrombie says it will close the Gilly Hicks stores and sell the brand's intimate apparel through Hollister stores and online and expects to complete the closures by May 2014.
"In connection with our long-term strategic review, we have decided to focus the future development of the Gilly Hicks brand through Hollister stores and direct-to-consumer channels," Jeffries said. "We believe it is critical to focus our efforts and resources where we have the greatest opportunities to drive profitable growth for our brands."