Abercrombie & Fitch Co. (NYSE: ANF) reported second-quarter fiscal 2016 results before markets opened Tuesday. The specialty retailer posted an adjusted diluted loss per share of $0.25 on net sales of $783.16 million. In the same period a year ago, the company reported adjusted earnings per share (EPS) of $0.12 and revenues of $817.76 million. Second-quarter results also compare to the Thomson Reuters consensus estimates for a loss per share of $0.02 and $787.71 million in revenues.

Same-store sales for the quarter in both the United States and internationally fell 4% year over year. Companywide, same-store sales were down 4%. Direct-to-consumer and omnichannel sales accounted for 23% of total quarterly sales. Gross margin slipped from 62.3% year-over-year to 60.9%, primarily due to higher average unit costs, partially offset by lower average unit retails.

In its outlook for the 2016 fiscal year, Abercrombie said it expects same-store sales to “remain challenging through the second half of the year, with a disproportionate effect from flagship and tourist locations.” At the end of the first quarter, the company said it expected same-store sales to “remain challenging in the second quarter, but to improve in the second half of the year.” That now appears to be out the window.

Gross margin is forecast to be flat at 61.9%. Foreign currency effects are expected to nick $25 million from sales and about $20 million from operating income.

Abercrombie did not provide an EPS or revenue forecast, but analysts are looking for 2016 EPS of $0.81 on revenues of $3.44 billion. Consensus estimates also call for third-quarter earnings per share sales of $0.43 and net sales of $862.38 million.

The company expects to open 15 new stores in 2016, 10 internationally and five in the United States, and to add six outlet stores, primarily domestically. Abercrombie also expects to close 60 U.S. stores in the fiscal year as leases expire.

Executive Chairman Arthur Martinez said:

Flagship and tourist locations continued to account for the vast majority of the comparable sales decline as traffic remained a significant headwind. We were encouraged, however, by strong growth in the direct-to-consumer business, both domestically and internationally, and by a comparable sales recovery in the Hollister European business, including in the U.K. … As we look to the rest of the year, we now expect flagship and tourist locations will continue to weigh on the business. Recognizing we are in a challenging environment, we are confident, however, that we are focusing on the right priorities and we expect to see traction in our business as we introduce new product and invest in marketing to drive awareness and relevance for our brands.

Shares traded down about 12% in Tuesday’s premarket, at $20.20 in a 52-week range of $16.49 to $32.83. The consensus target price for the stock was $23.03 before the report, and the high target is $35.00 a share.

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