Abercrombie & Fitch Co. (ANF), a leading international specialty retailer, posted a narrower net loss of $11.8 million or 13 cents per share, compared to a net loss $59.2 million in the year-ago period. The quarterly result also matched the Zacks Consensus Estimate. The year-over-year improvement was mainly driven by higher sales amid improving macroeconomic conditions and increased consumer spending.
During the quarter, Abercrombie’s total net sales expanded 14% to $687.8 million from $601.7 million in the year-ago period. Total company direct-to-consumer net merchandise sales surged 42% year-over-year to $68.8 million, while overall comparable-store sales increased marginally by 1%.
Abercrombie’s gross profit rate declined 70 basis points (bps) year-over-year due to a lower average retail unit. Stores and distribution expense rose 7.3% year-over-year to $354.4 million. Marketing, general and administrative expenses rose 12% year-over-year to $96.6 million, primarily due to higher legal and marketing expenses, and incentive compensation.
However, increased sales partially offset the increase in operating expenses. Accordingly, the company recorded a narrower operating loss of $18.7 million, compared to a loss of $33.9 million in the year-ago quarter.
Abercrombie ended the quarter with cash and equivalents of $600.5 million, compared to $463.7 million in the year-ago period.
During fiscal 2010, Abercrombie expects to open flagship stores in Copenhagen, Denmark and Fukuoka, Japan, and a Hollister Epic store on Fifth Avenue in New York. In addition, the company also expects to open approximately 25 international mall-based Hollister stores and one Abercrombie & Fitch store in Canada.
In accordance with current new store plans and other planned expenditures, Abercrombie now expects total capital expenditures in fiscal 2010 in the range of $200 million to $225 million, compared to its earlier prediction of $250 million to $260 million.
The Zacks Consensus Estimate on Abercrombie’s earnings for the fiscal year ending January 2011 is currently pegged at $1.86 per share, which increased by 8 cents over the past 2 months. For the next fiscal year, the Zacks Consensus Estimate has moved up by 2 cents over the past month as 7 of 31 covering analysts raised projections, while 4 moved in the opposite direction.
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