Abercrombie loss widens as sales fall 14%; expects sales to improve

New Albany, Ohio – Abercrombie & Fitch Co. posted a wider-than-expected loss and drop in revenue for its first quarter. But the teen apparel retailer, which is in the middle of a brand update to improve its controversial image, sounded a positive note, noting that its comparable sales continued to improve in May and that it expects sales to continue to improve in the second half.



“We knew the first quarter was going to be difficult due to a number of factors, both internal and external and, most significantly, because many of the actions we are taking to improve our business are in the early stages of implementation and have not yet been fully realized,” stated Arthur Martinez, executive chairman. “While our turnaround won`t be accomplished overnight, we believe the changes we are making will reinvigorate our iconic brands and lead to meaningful and lasting improvement."



Abercromie’s net loss for the quarter increased to $63.2 million from $23.7 million. Lease termination and store closure costs, as well as asset depreciation, contributed to the growth in net loss.



Net sales decreased 14% to $709.4 million, driven by a 8% decline in same-store sales and an adverse effect from changes in foreign currency exchange rates. By brand, same-store sales fell 9% for Abercrombie & Fitch and 6% for Hollister.



Abercrombie anticipates closing approximately 60 stores in the U.S. during the fiscal year through natural lease expirations.



In addition, the retailer plans to open 17 full-price stores in fiscal 2015 in the key growth markets of China, Japan and the Middle East, and five full-price stores in North America. The company also expects to open nine new outlet stores in the U.S.



Looking ahead, Abercrombie plans to invest in omnichannel capabilities. The retailer has also focused the entire organization on putting the customer at the center of everything it does, particularly with regard to store experience and our merchandise assortment.



“During the quarter, the company continued to take major strides to revitalize its brands, enhance performance, and position itself for a return to profitable growth,” said Martinez. “This includes significant changes across our business, including augmenting our leadership team, enhancing organizational structure and efficiency, addressing core merchandise and design processes, and optimizing our store fleet by adding stores in high potential markets while closing under-performing stores.”