Tuesday, November 27, 2007


While numerous apparel retailers reported weak third-quarter sales, Abercrombie & Fitch Co recently reported a 15 % increase in quarterly profit, helped by strength in A & F chain of stores. Last Sunday, there was a long waiting line just to get in the A & F flagship store on Fifth Avenue.

From the New York Times:
Abercrombie said third-quarter sales rose 13 percent to $973.9 million. Same-store sales, a key retail gauge that measures sales at stores open at least a year, increased 1 percent.
Same-store sales rose 3 percent at both its namesake Abercrombie & Fitch chain and its Abercrombie children's chain but fell 1 percent at its Hollister chain and 7 percent at its RUEHL stores.
Price increases on its merchandise and lower losses of inventory theft or shoplifting helped offset higher markdowns compared with a year earlier.
The company said its RUEHL stores, which first opened in 2004 and are geared toward 22- to 30-year-olds, are not performing as well as it would like, but it is still "very bullish" on the brand.
The retailer said its brands "are not intended to appeal to everyone," which limits expansion potential, but it is looking at international markets to bolster its growth.
"While we are less than halfway to full potential from a store expansion standpoint domestically, we are increasing focus on expanding the A&F and Hollister brands on an international basis," Kramer said.
He said the company is pursuing projects that have the highest returns on capital and the lowest risk.
Abercrombie will open a Tokyo flagship store in late 2009, its first store in Asia.
The retailer also plans to introduce a new concept, what it is calling a "fifth concept," in January with the opening of four stores.
For the second half of its fiscal year, it forecast earnings per share of $3.63 to $3.67. It said the low end of the outlook is based on flat same-store sales for the fourth quarter.
For its current fiscal year, it expects to increase its gross square-footage roughly 10 percent, mainly through the addition of six new Abercrombie & Fitch stores, 25 new Abercrombie stores, 58 new Hollister Co stores, seven new RUEHL stores, and four stores of its new concept.
(Reporting by Nicole Maestri; Editing by Gerald E. McCormick and John Wallace)

No comments: