FINANCE

Costco Q3 profit rises but fall short of Street; sales up

BY Michael Fickes

Issaquah, Wash. – Costco Wholesale Corp. reported 3% year-over-year net income growth in its third quarter, to $473 million from $459 million in the year-ago period, as sales and membership fees improved. However, it came in short of the roughly $482 million in profit analysts had expected.

Net sales for the quarter increased 7% to $25.23 billion, from $23.55 last year.

Total same-store sales rose 6%, excluding negative impacts from gasoline price deflation and foreign exchange. Same-store sales rose 6% in the United States, and 8% internationally.

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FINANCE

Abercrombie’s loss widens, but results still top expectations

BY Dan Berthiaume

New Albany, Ohio – Abercrombie & Fitch Co. reported a net loss of $23.7 million in the first quarter of fiscal 2014, up from $7.2 million in the year-ago period, but less than analysts had expected. Restructuring charges associated with the closure of Abercrombie’s Gilly Hicks stand-alone stores, as well as the impact of heavy discounting on profit margins, helped drive the retailer’s net loss growth. The chain backed its full-year forecast as demand in its female business improved and sales fell less than expected for the first time in six quarters.

Abercrombie’s net sales fell 1.9% to $822.4 million, well above Wall Street’s average estimate of $796.3 million. Same-store sales declined 4%.

Same-store sales by brand, including direct-to-consumer, decreased 1% for Abercrombie & Fitch, decreased 6% for abercrombie kids, and decreased 7% for Hollister Co.

"In what remains a difficult teen retail environment, we are pleased that earnings for the quarter were in line with our expectations,” said Mike Jeffries, CEO. “Overall sales for the quarter decreased 2%, which included strong growth in our direct-to-consumer business. In addition, comparable sales continued to head in the right direction, and included significant sequential improvement in our female business and our Abercrombie & Fitch brand as a whole.”

Looking ahead, Abercrombie anticipates opening 15 full-price international stores throughout the year, including a small number of Abercrombie & Fitch international mall-based stores. The company also now plans to open approximately eight-to-10 international and U.S. outlet stores during the fiscal year. In addition, Abercrombie continues to expect to close approximately 60-to-70 stores in the U.S. during the fiscal year through natural lease expirations.

Abercrombie also plans an expanded roll-out of its updated Hollister store format, which it has been testing since January of this year. The company now anticipates that the updated design will be rolled out in 75-to-100 stores by the end of the current fiscal year.

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REAL ESTATE

& Other Stories, H&M’s sibling brand, to SoHo

BY Michael Fickes

New York — & Other Stories, a sibling brand to H&M, has leased a 10,915-sq.-ft. space at 575 Broadway in the SoHo district of Manhattan, according to RKF, which represented the landlord, 575 Broadway Associates LP, in the transaction. Cole Schotz provided legal counsel. CBRE represented & Other Stories.

Upon opening later this year, it will be & Other Stories’ first location in the United States and its eighth store worldwide. The location offers 7,215 sq. ft. of ground floor retail space and 2,750 sq. ft. on the lower level.

& Other Stories is a fashion brand offering women a wide range of shoes, bags, accessories, beauty and ready-to-wear to create a personal style or story.

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