Abercrombie updates Q4 outlook, announces departure of Arthur Martinez
today Jan 22, 2018
Comparable sales are now expected to increase by high-single digits, as opposed to the low-single digits reported in the brand’s previous outlook. Net sales should also now be up low-teens, compared to a previous estimate of an increase in the mid- to high-single digits.
The predicted gross profit rate remains roughly in line with that previously stated, down approximately 100 basis points from last year's rate of 59.3%.
The impact of the Tax Cuts and Jobs Act of 2017 is still being analysed but the company is expecting to have to deal with a large income tax charge in the fourth quarter, due to a one-off deemed repatriation tax on accumulated foreign earnings.
Chief Executive Officer Fran Horowitz indicated that stronger-than-expected holiday sales helped boost the improved outlook, commenting, "We are pleased by our performance across all brands and channels during the holiday season, with continued strength at Hollister, and the Abercrombie brand on track to deliver positive comparable sales for the quarter.”
The brand has also announced that Arthur Martinez will step down from his role as Executive Chairman of the Board of Directors on February 3, 2018, at which time Terry Burman will step in as Non-Executive Chairman.
Both Martinez and Burman joined the brand’s Board in January 2014, and Martinez has been in his current position since December of the same year. Before this, he worked in a number of senior executive positions at companies including Saks Fifth Avenue, PepsiCo and Kate Spade, having also led the turnaround of Sears as the brand’s CEO in the late 1990s.
Burman also has a long track record in the retail industry, particularly in the specialty jewelry sector. He is currently Chairman of the Board of Tuesday Morning Corporation and previously served as President and Chief Executive Officer of Barry's Jewelers, and Chief Executive Officer of Signet, among other senior positions.
“I am proud of the demonstrable progress that Abercrombie & Fitch is making under the leadership of Fran Horowitz, who was appointed Chief Executive Officer early last year,” stated Martinez, explaining, “With the Company on a solid trajectory, this is the right time to hand over Board leadership to Terry, who has outstanding credentials as a retail industry leader and is the right person to assume the role."
Abercrombie & Fitch Co. is a New Albany, Ohio-based specialty apparel and accessories retailer operating through three brands: Abercrombie & Fitch, Hollister and Abercrombie Kids. The company has a worldwide network of over 1,000 stores with locations in the Americas, Europe and Asia.
The company’s fourth quarter and full year 2017 results are slated to be released on March 7, 2018.
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