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Abercrombie and Fitch profit surges in Q3, raises outlook

BY Katherine Boccaccio

Columbus, Ohio — Abercrombie and Fitch reported Wednesday net income of $71.5 million for the third quarter, compared with $50.9 million in the year-ago period and beating Wall Street expectations. The retailer is forecasting annual earnings above analysts’ estimates.

Revenue rose 9% to $1.17 billion, boosted by a 37% rise in international sales. Same-store sales dipped 3%.

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Retail imports to increase 5.9% in November despite superstorm

BY Katherine Boccaccio

Washington, D.C. — A report released Tuesday by the National Retail Federation and Hackett Associates said that import cargo volume at the nation’s major retail container ports is expected to increase 5.9% in November despite the temporary closure of some ports by superstorm Sandy.

According to the monthly Global Port Tracker report, U.S. ports followed by Global Port Tracker handled 1.42 million Twenty-Foot Equivalent Units in September, the latest month for which after-the-fact numbers are available. That was the same as August but up 3.3% from September 2011. One TEU is one 20-ft. cargo container or its equivalent.



“Sandy certainly caused major problems that are still being cleaned up, but retailers managed to get their cargo into the country and will have plenty of merchandise on store shelves for the holidays,” NRF VP for supply chain and customs policy Jonathan Gold said. “While there was clearly a regional impact, at this point the storm is not expected to have a major effect on holiday sales numbers.”

October was estimated at 1.46 million TEU, up 10.7% from last year, with November forecast at 1.37 million TEU, up 5.9%, and December forecast at 1.34 million TEU, up 9.4%. January is forecast at 1.39 million TEU, up 8.2% from January 2012; February at 1.22 million TEU, up 12%; and March at 1.26 million TEU, up 1.6%.

August, September and October are the three busiest months of the year as retailers bring merchandise into the country for the holiday season, and volume for the three months combined was up 5.8% at 4.3 million TEU. While cargo volume does not correlate directly with sales, NRF is forecasting that holiday sales will increase 4.1% to $586.1 billion this year.

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Staples results reflect economic weakness

BY CSA STAFF

Third quarter sales at Staples declined 2% to a little less than $6.4 billion and a host of previously announced charges resulted in the company reporting a loss of $569 million or 85 cents a share.

The profit picture looks a little better if charges related to the impairment of goodwill and other assets, restructuring, accelerated amortization and related tax charges are excluded. On an adjusted basis, profit fell to $310 million from $324 million while earnings per share were flat at 46 cents due to share repurchase activity. So far this year, Staples has spent $362 million to buy back 27.4 million shares.

"During the third quarter we launched a new strategic plan to become the product authority for businesses, restructured our organization, and generated solid earnings excluding charges," said Ron Sargent, Staples’ chairman and CEO. "Going forward, we are in a much stronger position to pursue our best growth opportunities."

Those opportunities were disclosed in the press release which detailed third quarter results, but opportunities for improvement were evident in many areas of the business based on third quarter results.

North American Retail sales of $2.6 billion were flat with the prior year, same store sales declined 1% and operating profits increased less than 1% to $285 million. Lower sales of computers and software were somewhat offset by growth of copy and print services and core office supplies.

Sales for the North American Delivery business unit increased 1% to $2.6 billion, but operating profits declined to $227 million from $245 million. The sales increase primarily reflects growth of facilities and breakroom supplies and copy and print services, partially offset by the previously announced loss of two large contract customers during the third quarter of 2011.

International sales decreased 12%, or 8% when measured in local currencies, to $1.1 billion, resulting in an operating loss of $1.7 million compared to a prior year operating profit of $35 million. Staples said the results reflect weak sales in Europe and Australia. Economic weakness drove declines in the company’s European delivery businesses, as well as a 6% decline in comparable store sales in Europe.

Staples may not be knocking the cover off of the ball when it comes to top line sales growth, but investors can take comfort in the company’s ability to generate cash until such time as improved economic conditions produce higher spending by business and consumers. Staples expects to generate more than $1 billion of free cash flow this year and maintain share repurchase activity that will result in the buy back of roughly $450 million worth of stock.

 

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