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What: Shares of teen retailer Abercrombie & Fitch hit the sales rack, down as much as 12% at one point, following the release of its first-quarter earnings results.
So what: For the quarter, Abercrombie delivered a 9% decline in sales, to $838.8 million, from the year-ago period, with the company losing $0.09 in EPS. Comparatively, Wall Street had anticipated revenue of $938 million, and a smaller loss of just $0.05 per share. Even worse, same-store sales slumped 15% -- and that's including direct-to-consumer sales! Management noted numerous inventory issues which haven't allowed them to get the right product to customers. Looking ahead, A&F cut its full-year EPS forecast to a range of $3.15-$3.25 from its own previous guidance of $3.35-$3.45.
Now what: Although management was quick to blame inventory issues, we could also be looking at the negative effects of higher payroll taxes and delayed tax refunds - at least in the U.S. The bigger problem for A&F is trying to save face with disparaging comments made by CEO Mike Jeffries seven years ago that have been rehashed in recent weeks on various social media platforms. At the high-end of the teen pricing range, there could be a lot of potential downside still to come for A&F shareholders if the company doesn't fix its inventory issues very quickly and put out this PR firestorm.
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The article Abercrombie & Fitch Gets Sent to the Sales Rack originally appeared on Fool.com.
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