Abercrombie sales slide 5.8%; dropping logo from clothes

New Dublin, Ohio -- Fast-fashion competitors like H&M and Forever 21 and teens more interested in technology than clothing make these challenging times for Abercrombie & Fitch, whose second quarter revenue fell 5.8% to $890.6 million, missing Wall Street projections. In a nod to changing fashion tastes, the company is phasing out the signature logo-centric clothing that helped build it into a teen retail powerhouse.

“In North America we will be out of the logo business by next spring,” said CEO Mike Jeffries during the company’s second-quarter earnings call with analysts. “It will remain a factor in the rest of the world.”

While sales were off, Abercrombie’s income beat estimates, rising 13% to $12.9 million from $11.4 million a year earlier. The company cited an ongoing profit improvement initiative as driving its net income growth.

Abercrombie’s same-store sales in the U.S. fell 8%, while store-sales in the international division plunged 16%. By brand and including direct-to-consumer sales, comparable sales slipped 1% for Abercrombie & Fitch, fell 6% for Abercrombie Kids and dropped 10% for Hollister.

The company said it is making progress in third quarter back-to-school sales.
“In a continued challenging environment, our sales for the second quarter were somewhat below plan, but we have seen modest improvement since the back-to-school floorset,” Jeffries stated. “We are confident that the evolution of our assortment will drive further improvements going forward, in particular as we move past the headwind of adverse likes in our logo business as we work to strategically reduce that element in our assortment.”

Abercrombie anticipates opening a total of 14 full-price international stores throughout the year, including eight Hollister stores and five Abercrombie & Fitch stores.

The company also plans to open approximately eight-to-10 international and U.S. outlet stores during the fiscal year. In addition, the company now expects to close approximately 60 stores in the U.S. during the fiscal year through natural lease expirations.
 

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