Abercrombie Stems Bleeding Sales in Key Brand

By EarningsFOXBusiness

Abercrombie & Fitch (NYSE:ANF) widened its fourth-quarter loss on Thursday as steep discounts, lower sales and high restructuring costs squeezed margins.

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However, it bested revenue expectations and backed its full-year forecast as demand in its key women’s brand improved and sales fell less than expected for the first time in six quarters.

Shares of the retail chain were up 5.2% to $36.95 in early trade.

The New Albany, Ohio-based teen retailer, which has been forced to expand its women's product line in an effort to lure back young customers who have taken to cheaper, hipper chains such as Forever 21, reported a loss of $23.7 million, or 32 cents a share.

That's worse than a year-earlier loss of $7.2 million, or 9 cents a share. But excluding one-time items, Abercrombie said it lost just 17 cents, better than the 19-cent loss forecast on average by analysts in a Thomson Reuters poll.

Revenue for the three months ended May 3 slumped 2% to $822 million but topped the Street’s view of $798 million.

"In what remains a difficult teen retail environment, we are pleased that earnings for the quarter were in line with our expectations,” said Abercrombie CEO Mike Jeffries, adding that the company is taking the "rights steps" and is on course to accomplish that goal.

Jeffries also said that same-store sales continued to “head in the right direction.” While they were down 4% during the quarter, that was slightly better than analysts had expected.

Abercrombie is anticipating full-year earnings in the range of $2.15 to $2.35 a share, mostly below the consensus view of $2.34. That’s assuming that gross margin rate is down slightly from 2013 and that same-store sales, a key measure of growth, are down 3% to 4%.