Abercrombie Shares Rising on Plans, Not Results (ANF)

Abercrombie & Fitch Co. (NYSE: ANF) reported second-quarter earnings per share (EPS) of $0.19 and $951.4 million in revenues before the markets opened this morning. In the same period a year ago, the clothing retailer reported EPS of $0.35 on revenue of $916.8 million. Second-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.17 and $994 million in revenue.

The company’s chairman and CEO said:

The second quarter results we are reporting today are disappointing and below our expectations coming into the quarter. In particular, we saw a further deceleration in the trend in our international stores, while our U.S. chain stores also comped negatively for the quarter for the first time since 2009.

Same-store sales declined 10% compared with the same period a year ago, and the gross profit for the quarter came in at 62.5%, down 110 basis points from a year ago. The company attributed the drop in gross profits to increased costs and the negative impact of currency exchange rates.

A&F forecast adjusted EPS of $2.50 to $2.75 for the full-year, compared with a consensus estimate of $2.56. The forecast assumes a 10% decline in same-store sales. The company also has lowered its planned openings of its Hollister-brand stores from 40 to 30 and a “pause” in openings of new flagship stores except in Shanghai, among other actions to reduce costs.

The company also said that it would pay its quarterly dividend of $0.175, in line with previous payments, and that it had increased its share repurchase plan by 10 million shares, bringing the total in its existing buyback authorization to 22.9 million shares. The company’s float totals about 81.4 million shares.

The EPS beat, the dividend payment, the guidance changes and the bump in the company’s buyback plan are boosting A&F’s share price this morning. Shares are trading more than 6% higher in the premarket at $34.47. The current 52-week range is $28.64 to $77.49. Thomson Reuters had a consensus analyst price target of $34.64 before today’s results were announced.

Paul Ausick