Abercrombie says turnaround not attracting enough shoppers at A&F

Abercrombie & Fitch Co shares fell 9 percent on Friday after the apparel retailer said efforts to revamp its namesake stores were yet to show significant gains in customer traffic.


Abercrombie & Fitch

Abercrombie's eponymous brand has seen higher demand this year after having struggled for the past five years, thanks to revamped stores and new advertisements.

But the company suggested those efforts may not be enough to connect with today's young shoppers - a demographic which made the brand famous in the 1990s.

"We've done a couple of things, including rolling out our loyalty programs and investing in (Abercrombie) stores to improve conversion, and we have seen benefits there.

However, they have not been able to offset the headwinds we're seeing in traffic," Chief Financial Officer Scott Lipesky said on a conference call.

Lipesky's remarks followed better-than-expected first-quarter results from the New Albany, Ohio-based retailer.

Both the Abercrombie and Hollister brands topped Wall Street expectations for same-store sales, while the company's net loss was much smaller than expected.

"If you look at the fundamentals and you look at the financial results, they were better than expected and that's the bottom line," said BlueFin Research analyst Rebecca Duval.
The results also come a day after Abercrombie & Fitch Chief Executive Officer Fran Horowitz told Bloomberg in an interview that impending U.S. tariffs against Chinese imports could be "one more thing to lose sleep on in this industry." The company's shares ended 7 percent lower on Thursday.

The Donald Trump administration is said to be preparing tariffs against Chinese products in an attempt to force changes in Beijing's intellectual property and investment practices. Washington could impose more than $60 billion (45 billion pounds) in tariffs on goods ranging from electronics to apparel, footwear and toys.

"It could be the tariff situation that is concerning the investors ... Obviously apparel retailers could be ultimately be affected because they import virtually everything," said Ken Perkins, founder of research firm Retail Metrics.

Abercrombie's shares, which are heavily shorted, fell 9.4 percent to $21.62 in late morning trading.

The company's net sales rose nearly 11 percent to $730.9 million exceeded Wall Street estimates. Abercrombie expects current-quarter revenue to rise in the high-single percentage digits.

Net loss attributable to Abercrombie & Fitch narrowed to $42.5 million from $61.7 million a year earlier.

Excluding time items, Abercrombie reported a loss of 56 cents per share, smaller than the 77 cents analysts were expecting.

© Thomson Reuters 2018 All rights reserved.

Fashion - Ready-to-wearBusiness