Home / Markets / Industries / Retail

Friday, November 14, 2008

Abercrombie, J.C. Penney See Profits Fall

Kathryn Elizabeth Tuggle

FOXBusiness

Abercrombie & Fitch and J.C. Penney on Friday joined the growing chorus of retailers that saw earnings

Abercrombie (ANF), the retailer of teen clothing and accessories, has experienced a third-quarter drop in net income of 46% due to a bad economy and loss of sales to competitors that offer cheaper products.

Total net income posted for November 1 was $63.9 million, or 72 cents per share, down from $117.6 million and $1.29 a share year over year. Revenue dropped 8% in total to $896.3 million.

The New Albany, Ohio-based retailer said that fourth quarter earnings would likely make it to $1 or $1.05 per share, while Thomson Reuters analysts had predicted $1.57 per share.

Abercrombie is now estimating this year’s earnings will hit $3.27 to $3.32 a share, a far cry from the company’s estimate in August of $4.95 to $5 per share.

In total, the retailer’s stock has fallen 72% in 2008, and 23% in the month of November.

J.C. Penney also saw its net income slide by about half -- the company’s income slid 52% due to slacking sales and low mall traffic. Net income for the company for the period ending November 1 totaled $124 million, or 55 cents per share, down from $261 million, or $1.17 a share, for the same period in 2007.

Although analysts had predicted earnings of $1.32 per share on $6 billion in revenue, the Plano, Texas-based company is predicting 90 cents to $1.05 per share earnings for its fourth quarter.

Additionally, inventory for J.C. Penney fell by 5.6%, an indication that the company is cutting back on extra styles that might not sell this holiday season.