Nov 21, 2013
Abercrombie & Fitch posts quarterly loss as sales slump
Nov 21, 2013
Teen clothing retailer Abercrombie & Fitch struggling to keep up with the fast-changing tastes of young shoppers, reported a quarterly loss as comparable-store sales declined for the seventh straight quarter.
A&F, which reported a profit in the year-earlier quarter, also warned of a "significant" erosion in gross margins and a low double-digit percentage fall in comparable sales as it enters the holiday shopping quarter with excess inventory.
Inventory management, or balancing orders with demand, has been a major concern for the company, forcing it to offer discounts that have eaten into earnings.
Retailers ranging from department store operator Macy's to apparel retailers such as Urban Outfitters are offering huge discounts to help shift stock during what is expected to be the toughest holiday shopping season since 2008.
But teen clothing sellers such as A&F are discounting the most, due in part to high unemployment rates among the young but also because teens are spending more on high-cost items such as mobile phones, gaming consoles and tablets.
"We expect promotional levels through the holiday season to maintain the depth and aggressiveness seen in September and October, as retailers look to move goods in order to enter 2014 in a clean inventory position," Janney Capital Markets analyst Adrienne Tennant said in a research note on Wednesday.
A&F reported a net loss of $15.6 million, or 20 cents per share, for the third quarter ended November 2 compared with net income of $84.0 million, or $1.02 per share, a year earlier.
Excluding items the company earned 52 cents per share, including a tax benefit of 6 cents per share.
Net sales fell 12 percent to $1.03 billion while total comparable sales, including online sales, fell 14 percent.
Comparable sales fell 13 percent at Abercrombie & Fitch outlets, 4 percent at Abercrombie Kids and 16 percent at the company's Hollister chain of teen clothing stores.
The company announced the total comparable store sales figures earlier this month.
A&F shares were down 2.7 percent at $34.05 in trading before the bell.
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