Abercrombie & Fitch Q2 results disappoint; outlook below estimates
New Albany, Ohio — Abercrombie & Fitch Co. earned $11.4 million for the second quarter, down from $17.1 million in the year-ago period, amid a 10% drop in same-store sales. The retailer, whose results missed analysts’ estimates, also gave a third-quarter earnings forecast well below Wall Street expectations.
Abercrombie & Fitch and many other teen retailers have struggled of late, with their sales impacted not only by financially constrained consumers but also by the inherent fickle nature of their customer base.
“One generation of customers has moved on and the next generation doesn’t see Abercrombie as cool,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business, in a Reuters report.
Revenue for the period ended Aug. 3 edged down 1% to $945.7 million. In the United States, sales fell 8% including the direct-to-consumer business. Wall Street estimated revenue of $996.7 million.
Same-store sales fell 10%. Same-stores fell 11% in the United States, and 7% overseas. By division, Hollister Co. had the toughest quarter, with a 13% sales drop. The chain’s namesake brand reported a 6% decrease, while same-store sales for Abercrombie kids fell 3%.
International sales, including direct-to-consumer, rose 15%. Direct-to-consumer sales for the whole company jumped 21%.
"The second quarter was more difficult than expected due to weaker traffic and continued softness in the female business, consistent with what others have reported. In that context we are planning sales, inventory and expenses conservatively for the remainder of the year," said Abercrombie CEO Mike Jeffries in the release. "Despite the challenging environment, we are very pleased by strong growth in our direct-to-consumer business and continued strong growth in China. We have also made excellent progress on our profit improvement initiative during the quarter, and we now expect savings from this initiative to exceed $100 million annually.”
Target talks omni-channel on Q2 call; to expand buy online pick up in store program
New York — Target Corp. executives discussed the chain’s omni-channel initiatives on the company’s second quarter conference call with investors. Target’s executive VP merchandising and supply chain, Kathryn Tesija highlighted the company’s investments in flexible fulfillment, including plans to expand a program allowing customers to buy items online and pick them up at the store the same day, starting in the third quarter.
Mobile offerings have shown some success as well. Tesija said that Target’s Cartwheel app — launched in June, it allows customers to use mobile phones to find and share deals on Facebook and search for deals while shopping in the stores — already has more than 1 million users who had generated more than $2 million in savings. Among active users of the app, more than 50% had used it to complete multiple transactions.
Target president, chairman and CEO Gregg Steinhafel said Facebook had informed the company that engagement statistics for the app were among the best it had ever seen for an app in beta testing. Currently, the app is among the top 20 in the Apple Store.
Buckle Q2 income up 8%
Kearney, Neb. — The Buckle’s net income rose 8% in the second quarter on improved sales. The apparel retailer earned $25.1 million for the three months ended Aug. 3, compared to $23.2 million a year ago.
Revenue grew 8%, to $232.5 million from $215.5 million. Online sales rose 5.3%. Same-store increased 3.2%, short of analysts expectations.