Abercrombie & Fitch posts flat Q3 results, earnings decline

For its third quarter, Abercrombie & Fitch Co. reported net sales of 863.5 million dollars, approximately flat on a reported basis and up 1 percent on a constant currency basis as compared to last year. The company said, comparable sales were also approximately flat against positive 3 percent comparable sales last year. Net income per diluted share of was 10 cents compared to 35 cents last year on a reported basis; and 23 cents compared to 33 cents last year on an adjusted non-GAAP basis; and 23 cents compared to 27 cents last year on an adjusted non-GAAP constant currency basis.

Commenting on the results, Fran Horowitz, the company’s Chief Executive Officer, said in a statement: “Continued U.S. momentum was offset by challenges across several of our key international markets as well as a complicated global operating environment, which weighed on overall results. While we are focused on the upcoming holiday season, we also continue to make progress against our long-term transformation initiatives including: delivering 34 new store experiences, keeping us on track for our goal of 85 for the year; continuing the global rollout of omni capabilities and new payment options; and building our customer and product-facing teams in the EMEA and APAC regions.”

Highlights of Abercrombie & Fitch’s Q3 performance

The company added that both Hollister and Abercrombie delivered positive U.S. comps, resulting in a total company U.S. comp of positive 3 percent against positive 6 percent last year, offset by international comps of negative 8 percent against negative 3 percent last year.

Gross profit rate of 60.1 percent, was down 120 basis points on a reported basis and down 80 basis points on a constant currency basis as compared to last year. Operating income was 14.5 million dollars compared to 39.7 million dollars last year on a reported basis. Operating income on an adjusted non-GAAP basis, was 24.9 million dollars down from 36.7 million dollars last year, reflecting the adverse impact of changes in foreign currency exchange rates of 5 million dollars. Operating income margin of 1.7 percent, down 290 basis points from last year on a reported basis, while on an adjusted non-GAAP basis, it was 2.9 percent, down 140 basis points from last year.

Abercrombie & Fitch expects flat sales growth

For fiscal 2019, the company expects net sales to be in the range of flat to up 1 percent, driven by comparable sales and net new store contribution, partially offset by an adverse impact from changes in foreign currency exchange rates and comparable sales to be in the range of flat to up 1 percent, against positive comparable sales of 3 percent last year. The company expects gross profit rate to be down approximately 100 basis points from the fiscal 2018 rate of 60.2 percent, reflecting a combined adverse impact of 40 basis points from changes in foreign currency exchange rates and anticipated China tariffs.

For the fourth quarter of fiscal 2019, the company expects net sales to be in the range of flat to up 2 percent, reflecting an adverse impact from changes in foreign currency exchange rates of approximately 5 million dollars and comparable sales to be in the range of flat to up 2 percent, against positive comparable sales of 3 percent last year. Gross profit rate is expected to be down approximately 150 basis points as compared to fiscal 2018 rate of 59.1 percent, reflecting a combined adverse impact of 70 basis points from changes in foreign currency exchange rates and anticipated China tariffs.

Picture:Abercrombie & Fitch website