FINANCE

Abercrombie & Fitch reports weak Q3 sales; will close Gilly Hicks stores

BY Dan Berthiaume

New Albany, Ohio — Abercrombie & Fitch reported weak net and comparable store sales and laid out plans to restructure its Gilly Hicks brand as part of a strategic review in advance of releasing its full results for the third quarter of fiscal 2013.

Net sales for the quarter decreased 12% year-over-year, to $1.03 billion from $1.17 billion. Analysts had been expecting a $1.07 billion quarterly net sales figure. Total same-store sales for the quarter, including direct-to-consumer sales, decreased 14% with same-store U.S. sales decreasing 14% and same-store international sales decreasing 15%. In one positive result, total direct-to-consumer sales increased 11% for the quarter.

In response to these soft results, Abercrombie & Fitch will shutter all 28 of its Gilly Hicks stores. Most closures will occur by the end of the first quarter of fiscal 2014. The retailer will continue to sell Gilly Hicks branded merchandise through its Hollister retail banner and direct-to-consumer channel.

"Our results for the third quarter reflect continued top-line challenges, with overall spending among younger consumers remaining weak,” said Mike Jeffries, CEO and chairman of the board of Abercrombie & Fitch. “Until we have seen a clear trend improvement, we are continuing to take a cautious approach into the fourth quarter and are working to end the year with appropriate levels of fall carryover inventory.”

Abercrombie & Fitch expects a low-double-digit decrease in same-store sales for the fourth quarter of fiscal 2013. The retailer will release full third quarter earnings on Nov. 21.

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FINANCE

HSN displays strong Q3 performance

BY Dan Berthiaume

St. Petersburg, Fla. – HSN, Inc. (HSNi) reported impressive financial results for the third quarter of fiscal 2013. Net income soared about 137% to $42.05 million, compared to $17.69 million in the same quarter a year prior.

In addition, net sales grew almost 3%, to $789.9 million from $778.8 million. The elimination of a roughly $18 million loss related to debt extinguishment recorded in the third quarter of fiscal 2012 drove much of the quarterly net income growth. Mindy Grossman, CEO of HSN, also cited digital and mobile growth as boosting the company’s overall performance.

"HSNi has built a powerful and diverse portfolio of brands and products enabling us to capitalize on consumer trends, manage marketplace dynamics and position the company for long-term success," said Grossman. "During the third quarter, this strategy resulted in record customer levels at HSNi, an increase in digital penetration of 230 basis points, including strong growth in mobile, which now represents 12% of our total business, and Adjusted EPS growth of 19%."

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OPERATIONS

Starbucks wants to hire 10K vets, active duty spouses

BY Dan Berthiaume

Seattle – Starbucks says it will develop a comprehensive hiring platform for veterans and active duty spouses in response to record growth and in anticipation of a 500,000-person future global workforce. This multi-year hiring and career development strategy will focus on establishing an internal infrastructure dedicated to matching the transferable skill sets of veterans and military spouses with the specific talent needed across the Starbucks enterprise.

It will also build upon and expand the company’s specialized mentoring programs as provided via the Armed Forces Network (AFN) since 2007. Starbucks is also offering a job skills translator for veterans on its website and operating “community stores” in Lakewood, Wash. and San Antonio, sharing a portion of each transaction with non-profit programs Operation GoodJobs and Vested in Vets as part of a commitment to establish five such stores in joint base communities around the country.

“The value we are creating for shareholders is tied to the values that guide us as an organization,” said Howard Schultz, president, chairman and CEO of Starbucks. “As I look at the opportunity ahead of us, we’re going to need to hire men and women with like-minded values and the right job skills in order to continue our current levels of growth. The more than one million transitioning U.S. veterans and almost one and half million military spouses, with their diverse background and experience, share our mission-driven sensibility and work ethic and can build long-term careers at Starbucks as they return home.”

Starbucks currently employs roughly 100,000 people globally.

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