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Abercrombie & Fitch reports drop in net profit

Preppy fashion retailer Abercrombie & Fitch reported a fall in profit for its second quarter as its clothing sales declined in the US.

GENERAL MERCHANDISE

Abercrombie & Fitch reports drop in net profit

Preppy fashion retailer Abercrombie & Fitch reported a fall in profit for its second quarter as its clothing sales declined in the US.

Mike Jeffries, the company's CEO, said: "The second quarter results we are reporting today are disappointing and below our expectations coming into the quarter. In particular, we saw a further deceleration in the trend in our international stores, while our U.S. chain stores also comped negatively for the quarter for the first time since 2009."

In the thirteen weeks to 28 July 2012, net income dropped to $15.52 million or $0.19 per share from $32.03 million or $0.35 per share in the prior year. However there was a modest increase in net sales which rose 4% to $951.41 million from $916.76 million. 

Including direct-to-consumer sales, total US sales decreased by 5% to $648.0 million while international sales increased 31% to $303.4 million. Total company direct-to-consumer sales, including shipping and handling, increased 25% to $127.7 million.

Comparable store sales in the US fell 10%, with an 11% drop for Abercrombie & Fitch, 10% decline for Abercrombie Kids, and a 10% decrease for Hollister.

Higher costs affected gross profit while an increase in marketing and general administrative expenses reduced operating income. 

Abercrombie & Fitch said earlier this month that it now expects to earn between $2.50 and $2.75 per share for the year after previously forecasting between $3.50 and $3.75 per share.

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