Abercrombie & Fitch posts surprise rise in same-store sales
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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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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