Abercrombie and Fitch Soar on Earnings Beat

Andrew Klips  |

Shares of Abercrombie and Fitch (ANF) roared ahead at the opening bell on Wednesday as the purveyor of teenage apparel posted earnings and revenue from the latest quarter that beat Wall Street expectations as gross margins improved and overseas sales thrived.  With the earnings beat, ANF also boosted their full-year guidance.

Abercrombie and Fitch reported a 40 percent jump in third-quarter earnings of $71.5 million, or 87 cents per share, compared to $50.9 million, or 57 cents per share, in the third quarter of 2011.  Revenue increased by 8.7 percent to $1.17 billion, on the back of a 37 percent surge to $351.1 million in international sales.  Tallying $818.6 million, U.S. sales were basically flat compared to last year’s third quarter.

Analysts were expecting earnings of 59 cents per share and revenue of $1.11 billion.

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Same-store sales, a comparison of sales at stores open a minimum of one year, fell 3 percent.  Although same-store sales slumped, it was still an improvement compared to the 10 percent drop in the year prior quarter.   Abercrombie execs expect a mid-single digit percentage drop in same-store sales during the fourth quarter.  Stores recently opened or closed are not included in same-store sales.  The quarter ended with the company operating 1,067 stores.

Including shipping and handling, direct-to-consumer sales rose by 20 percent to $158.3 million in Q3 2012.

Gross margins increased 2.4 percentage points to 62.5 percent.

For the full fiscal year, the New Albany, OH-based company is predicting earnings per share between $2.85 and $3.00, versus the earlier estimate of $2.50 to $2.75 in profits.  Analysts had only been expecting earnings to be $2.48 per share for the year.

Shares of ANF were down more than 30 percent heading into Wednesday’s open (and more 50% in the last 52 weeks) as the retailer has been shaving international store openings, closing domestic stores and discounting apparel as it struggles to sell its preppy clothes to consumers living on tighter budgets.

Heading into the lunch break, shares are trading off highs $40.69, but have still pressed 27% higher to $39.52 for the day on what could prove to be an all-time record daily volume by the time of the closing bell.  More than 20 million shares have already changed hands as shares have hit their highest level since May 16.

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