Abercrombie 4Q Plunges 78%, But Shares Surge

Abercrombie & Fitch (NYSE:ANF) reported a sharp drop in fourth-quarter profit that just matched Wall Street's expectations, but shares surged Wednesday on a stronger 2012 forecast and improved sales abroad.

The New Albany, Ohio-based teen apparel retailer reported net income of $19.6 million, or 22 cents a share, compared with a year-earlier profit of $92.6 million, or $1.03 a share.

Excluding one-time impairment charges and writedowns, Abercrombie said it earned $1.12, matching average analyst estimates in a Thomson Reuters poll.

Its margins were squeezed during the period on soaring cotton prices and an uptick in promotional spending during the holidays.

Revenue for the thirteen weeks ended Jan. 28 was up 16% to $1.33 billion from $1.15 billion a year ago, also in line with the Street’s view. Sales in the U.S. grew 4% to $962 million.

Total comparable sales, or those at stores open longer than a year, were flat compared with 2011, down in both Abercrombie & Fitch and abercrombie kids, partially offset by a 2% increase in Hollister.

"Our results for the fourth quarter were below our expectations in an extremely challenging environment,” Abercrombie CEO Mike Jeffries said in a statement.

But the company says it is on track with in long-term strategy of building its global presence and Jeffries said the overall economics of its business in Europe, in U.S. tourist stores and in its DTC business “remain very strong.”

International sales increased 62% to $366.6 million, and shares of the retailer were up about 10% to $48.89 Wednesday morning.

In 2012, the company sees earnings in the range of $3.50 to $3.75 a share, higher than average estimates of $3.47. Abercrombie continues expansion plans during the year, opening five Abercrombie & Fitch flagship stores in Hamburg, Hong Kong, Munich, Dublin and Amsterdam.

The company’s board on Tuesday declared a quarterly cash dividend of 17.5 cents a share, payable on March 13 to shareholders of record on Feb. 27.