Abercrombie & Fitch posts surprise rise in same-store sales

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Teen apparel retailer Abercrombie & Fitch Co (ANF.N) posted a surprise rise in sales in the holiday-shopping quarter, snapping a streak of more than three years of declines, due to strong demand for its Hollister branded clothing.

The retailer's results on Wednesday showed its efforts to revive sales growth by revamping merchandise and improving shoppers' in-store experience were paying off, and sent its shares up nearly 9 percent to $31.96 in premarket trading.

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Abercrombie said sales at stores open at least 12 months rose 1 percent in the fourth quarter ended Jan. 30. Analysts on average were expecting a decline of 0.10 percent, according to research firm Consensus Metrix.

"They (results) are a sign that the brand continues to make progress in what remains a challenging market during a particularly difficult period of trading," said Neil Saunders, chief executive of research firm Conlumino.

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Abercrombie & Fitch posts surprise rise in same-store sales
FILE - In this file photo made Wednesday, Nov. 11, 2009, a shopper holds a shopping bag in front of an Abercrombie & Fitch store in Portland, Ore. Abercrombie & Fitch narrowed its loss in the first quarter Tuesday, May 18, 2010, as sales improved in the U.S. and overseas, but the retailer lost more money than analysts expected as it made less money on some sales.(AP Photo/Rick Bowmer, file)
SAN FRANCISCO, CA - AUGUST 26: Pedestrians walk by an Abercrombie & Fitch store on August 26, 2015 in San Francisco, California. Abercrombie & Fitch reported better-than-expected second quarter revenue falling to $817.8 million from $890.6 million one year ago. Analysts had predicted $811 million in revenue. (Photo by Justin Sullivan/Getty Images)
Holiday shoppers walk past a billboard for an Abercrombie & Fitch store, Wednesday, Dec. 9, 2009 in New York. Investors are hopeful that a report Friday on retail sales will show consumers are opening up their wallets this holiday season. (AP Photo/Mark Lennihan)
Shoppers carry an American Eagle Outfitters Inc. bag and Abercrombie & Fitch Co. bags in San Francisco, California, U.S., on Thursday, Aug. 16, 2012. American Eagle Outfitters Inc. is expected to release earnings data on August 22. Photographer: David Paul Morris/Bloomberg via Getty Images
SAN FRANCISCO, CA - AUGUST 26: Pedestrians walk by an Abercrombie & Fitch store on August 26, 2015 in San Francisco, California. Abercrombie & Fitch reported better-than-expected second quarter revenue falling to $817.8 million from $890.6 million one year ago. Analysts had predicted $811 million in revenue. (Photo by Justin Sullivan/Getty Images)
** FILE ** In a file photo a shopper carries an Abercrombie & Fitch shopping bag after purchasing items in one of the company's New York stores Tuesday, Aug. 16, 2005. The Commerce Department reported Friday Oct. 28, 2005, that economic activity expanded at an energetic 3.8 percent annual rate in the third quarter, providing vivid evidence of the economy's stamina. Growth in the third quarter was broad-based, reflecting brisk spending by consumers, businesses and government. (AP Photo/Mark Lennihan)
Shoppers walk past an Abercrombie & Fitch Co. store at the Roosevelt Field Mall in Garden City, New York, U.S., on Saturday, Nov. 14, 2015. The Bloomberg Consumer Comfort Index, a survey which measures attitudes about the economy, is scheduled to be released on November 19. Photographer: John Taggart/Bloomberg via Getty Images
A pedestrian walks by the Abercrombie & Fitch store Monday, Nov. 14, 2005 at Easton Town Center in Columbus, Ohio. (AP Photo/Kiichiro Sato)
MUNICH, GERMANY - OCTOBER 25: Male models pose outside the Abercrombie & Fitch flagship clothing store before the opening of Abercrombie & Fitch Munich flagship store on October 25, 2012 in Munich, Germany. (Photo by Hannes Magerstaedt/Getty Images)
Bare-chested models pose in front of the Abercrombie & Fitch shop on the Champs Elysees in Paris Thursday May 12, 2011, as of the promotion of the opening of the new U.S. brand shop in Paris.(AP Photo/Remy de la Mauviniere)
Shoppers walk past a billboard for a soon-to-be opened Abercrombie and Fitch store outside a shopping mall on Thursday Aug. 18, 2011 in Singapore. The city-state's Prime Minister Lee Hsien Loong warned Singaporeans in his recent national day address that economic problems in the U.S. and Europe pose a serious risk to world growth which could lead to another recession. (AP Photo/Wong Maye-E)
A window at the Abercrombie & Fitch flagship store on New York's Fifth Ave. is shown Tuesday, Jan. 24, 2006. The teen retailer, based in New Albany, Ohio, reported Jan. 5, 2006 a 37 percent increase in sales for 2005. (AP Photo/Mark Lennihan)
Pedestrians walk pass a giant display ad for the retailer, Abercrombie & Fitch, on Saturday, May 14, 2005 on New York's Fifth Avenue. Abercrombie & Fitch is expected to release earnings after the market close on Tuesday, May 17, 2005. (AP Photo/Kiichiro Sato)
A woman walks past the Abercrombie & Fitch storefront at Tower City Center in downtown Cleveland Thursday, May 5, 2005. Consumers showed more signs of caution during April, giving the nation's retailers mixed sales results for the month. Abercrombie & Fitch Co. had a 16 percent gain in same-store sales (AP Photo/Mark Duncan)
**FILE** In this Feb. 13, 2006, file photo, shoppers walk past the entrance of the Abercrombie & Fitch clothing store in Des Peres, Mo. On Friday, the Commerce Department reported that retail sales dipped 0.1 percent after edging up by the same amount in May. (AP Photo/James A. Finley)
FILE - In this May 25, 2011 file photo, an Abercrombie & Fitch employee, center, poses for photos with two customers at the entrance to the company's Fifth Avenue store, in New York. Abercrombie & Fitch Co. said Wednesday, Aug. 17, 2011, its second-quarter net income rose 64 percent, boosted by higher demand for its preppy fashions in the U.S. and Europe.(AP Photo/Mark Lennihan, File)
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The retailer has reduced its logo-centric clothing, which had fallen out of fashion, and added trendier new styles in denim and Bohemian-inspired skirts and tops over the past year.

It has also remodeled Hollister stores by changing the music, lighting and how it stacks clothes in stores.

That helped same-store sales at Hollister increase 4 percent in the quarter, handily beating the 2.20 percent rise analysts were expecting.

Abercrombie said it expected company-wide same-store sales to be flat to slightly positive in fiscal 2016. Analysts on average had expected a rise of 0.8 percent.

However, the retailer's executive chairman, Arthur Martinez, said 2016 "is likely to remain a challenging environment", in part due to a strong U.S. dollar.

Net income attributable to the company rose 30.1 percent to $57.7 million in the latest fourth quarter. Excluding items, it earned $1.08 per share.

Net sales were $1.11 billion, down 0.6 percent and falling for the twelfth quarter in a row. But the decline has been slowing and sales have now beaten estimates for the third straight quarter.

Analysts on average had estimated a profit of 99 cents per share and sales of $1.10 billion, according to Thomson Reuters I/B/E/S.

Up to Tuesday's close, the company's stock had risen more than 20 percent in the last 12 months.

(Reporting by Subrat Patnaik in Bengaluru; Editing by Savio D'Souza)

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