Teen apparel retailer Abercrombie & Fitch
Co. reports earnings for the fiscal second-quarter quarter on Friday.
The following is a summary of key developments and analyst opinion
related to the period.
OVERVIEW: Abercrombie & Fitch
Co. has seen sinking sales amid the recession, as it kept its price
points among the highest in the teen sector and waited for a rebound.
Over the past few months it has planned more sales and offered lower
entry-level prices, but sales are still expected to sink during the
quarter ended Aug. 2. Meanwhile, competitors such as Aeropostale Inc.
and American Eagle Outfitters Inc., with their emphasis on low prices
and basics, have fared better.
Sales in stores open at least on year, or so-called same-store
sales, fell 28 percent in July, 32 percent in June and 28 percent in
May.
The company said it was shuttering its high-priced Ruehl line of
handbags and apparel in a move expected to be complete in January 2010.
New Albany, Ohio-based Abercrombie also operates surf-themed Hollister, abercrombie, its store for children, and Gilly Hicks, an intimate apparel line.
BY THE NUMBERS: Analysts polled by Thomson Reuters, on average,
predict a loss of 7 cents per share on revenue of $647.9 million. The
company said, according to a preliminary tally, sales fell 23 percent
to $648.5 during the quarter.
ANALYST TAKE: In a note to investors, RBC Capital Markets analyst
Howard Tubin said in a client note Tuesday lowering price points and
offering more "current-season" fashion in stores are encouraging acts,
but he said it will take more of an effort for results to improve.
"We remain on the sidelines with respect to the shares until we see
significant newness offered within the assortments across all
concepts," wrote Tubin, who rates the company "Average Risk."
Stifel Nicolaus analyst Richard Jaffe wrote in a note to investors
that he expects a loss of 3 cents per share, with weak women's apparel
offerings and the recession holding back results.
"On a positive note we believe management has demonstrated better
inventory management, which bodes well for the second half and we
believe that the markdown cadence will likely be more effective going
forward (shallower markdowns taken throughout the quarter instead of
deep clearance activity at the end of the quarter)," he wrote.
WHATS AHEAD: Analysts will be looking for any indication about how back-to-school sales are doing, an update on closing Ruehl stores and any indications about how the company is planning for the upcoming holiday season.
STOCK PERFORMANCE: Shares rose 13 percent during the three months ended Aug. 1.
