Abercrombie & Fitch Reports 40 Percent Increase In Profit, Shares Jump

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Abercrombie & Fitch Co. (NYSE:ANF)’s profit increased by 40 percent, while its revenue increased by 9 percent during the third quarter, driven by stronger sales of its product overseas.

The company reported a net income of $71.5 million or 87 cents per share and its revenue was $1.17 billion during the three month period that ended October 27. During the same period last year, the company’s net income was $50.9 million or 57 cents per share.

Abercrombie & Fitch Co. (NYSE:ANF) exceeded earnings per share and revenue consensus expectations of analysts, based on the data compiled by Thomson Reuters.

During the third quarter, the company’s gross margin increased by 2.4 percent to 62.5 percent. The management of Abercrombie & Fitch adjusted their earnings outlook for the company for the full-year 2012 from the previous range of $2.50 to $2.75 per share, to $2.85 to $3 per share.

Mike Jeffries, chairman and chief executive officer of Abercrombie & Fitch Co. (NYSE:ANF) said,”These significantly improved financial results reflect progress on several fronts over the past quarter. Our US chain store business posted healthy growth on top of a strong quarter a year ago, and we saw sequential trend improvement in our international business. Our principal focus remains to execute against our key strategic initiatives to leverage our iconic brands and to continue to be judicious in our use of our shareholders’ capital to drive long-term shareholder value.”

Abercrombie & Fitch’s total sales in the United States were $818.6 million. The company’s total sales overseas increased by 37 percent to $351.1 million, while the total company direct-to-consumer sales including shipping and handling climbed by 20 percent to $158.3 million.

According to the company, the Abercrombie & Fitch Co. (NYSE:ANF) brand delivered $440 million in total sales; the Abercrombie Kids generated $99.8 million total sales and the Hollister Co. brand posted $602.5 million total sales during the quarter. The total comparable-store sales declined by 3 percent, compared with the result during the same period last year.

Abercrombie & Fitch’s total sales in the direct-to-consumersegment, including shipping and handling revenues in the United States, increased by 15%, while sales internationally rose by 31%.

The company has approximately $349.7 million in cash and cash equivalents, $19.9 million in current, marketable securities, and $60.0 million in borrowings under its revolving credit agreement at the end of the third quarter.

Abercrombie & Fitch Co. (NYSE:ANF) repurchased 3 million shares of its common stock for approximately $104.3 million during the period. The board of directors of the company also approved a dividend payment of $0.175 per share to stockholders.

Analysts at Nomura Equity Research upgraded their rating of Abercrombie & Fitch stock from “neutral” to “buy”, with a target price of $51 per share. The analysts believed that Abercrombie & Fitch Co. (NYSE:ANF) “turned a corner,” and management of the company is managing the business appropriately. In addition, they believe that the company has the ability to achieve an earnings power of $4.00 over the next two years.

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