Abercrombie & Fitch Co. (NYSE:ANF) released its latest quarterly earnings report this morning, posting adjusted earnings of 42 cents per share or $30.4 million on $911 million in revenue. Analysts had been expecting earnings of 43 cents per share on $918.3 million in revenue. In the same quarter last year, Abercrombie reported 52 cents per share of $40.5 million in earnings.
Reported earnings per share were 25 cents or $18.2 million for the third fiscal quarter.
Abercrombie & Fitch posts declining sales
The teen apparel retailer’s adjusted profits plunged 25% year over year, and management cited less mall traffic, weak demand and deeper discounts. Same store sales slipped 10%, which was worse than analyst expectations of a 9.1% decline. Sales in Europe were especially weak during the quarter.
Abercrombie reported declining sales in all of its Abercrombie Kids, Abercrombie & Fitch and Hollister branded stores. Net sales according to brand were $385.4 million for the company’s flagship branded stores, a 6% decline; $81.3 million for Abercrombie Kids, a 10% decline; and $468.1 million for Hollister & Co., a 12% decline.
Management said they saw a modest improvement in sales last month, a trend that continued through the Black Friday shopping weekend. However, they continue to expect a difficult sales climate through the rest of the current quarter.
Abercrombie & Fitch Co. (NYSE:ANF) reported a .8 point decline in gross profit margin, which fell to 62.2%. However, cost reductions partially offset that decline. According to MarketWatch, the struggling apparel retailer said earlier this year that it will stop putting logos on its clothes by spring, an important move because teens have begun to shift their tastes away from clothing with logos.
Abercrombie & Fitch cuts earnings guidance
The apparel retailer also reduced its full year guidance for 2014. Management now projects earnings of between $1.50 and $1.65 per share. That’s significantly lower than the average analyst estimate of $1.74 per share, which had already been lowered from $1.83 per share previously. It’s also a major reduction from the previous guidance of between $2.15 and $2.35 per share.
In the current quarter, Abercrombie & Fitch Co. (NYSE:ANF) guided for a decline of mid- to high-single digit percentage in comparable store sales.