UPDATE 3-Abercrombie to close Ruehl, amends credit pact

* Abercrombie to close Ruehl chain by end of fiscal year

* Sees taking additional $65 mln in charges

* Shares up 4.6 pct
(Adds analyst comment)

By Martinne Geller

NEW YORK, June 17 (Reuters) - Abercrombie & Fitch Co
(ANF.N: Quote, Profile, Research) said on Wednesday it will close its money-losing Ruehl
chain, sending its shares up 4.6 percent on relief the clothing
retailer will soon focus on core brands.

Abercrombie said the closure should be substantially done
by the end of the current fiscal year, which began in
February.

"It has been a difficult decision to close Ruehl, a brand
we continue to believe could have been successful in different
circumstances," said CEO Mike Jeffries. "However, given the
current economic environment, we believe it is in the best
interests of the company to focus its efforts and resources on
the growth opportunities afforded by our other brands,
particularly internationally."

In addition to its namesake stores, Abercrombie also runs
the Hollister and Gilly Hicks chains.

With the recession eating into discretionary budgets and
even wealthy consumers looking for bargains, Abercrombie's
sales have spiraled downward as the company kept its prices
high to safeguard its cachet.

Ruehl, which used a Greenwich Village aesthetic to appeal
to hip twentysomethings, saw sales at stores open at least a
year fall 34 percent in the first quarter.

The 29-store chain generated a pretax operating loss of $58
million during the last fiscal year.

"The news of closing Ruehl today is largely viewed as a
relief, came slightly sooner than expected and allows
Abercrombie to focus its growth and capital on international
business," said UBS retail analyst Roxanne Meyer.

A strategic review of Ruehl, which was announced in May,
led the company to incur $51 million in impairment charges
during the first quarter, which ended on May 2.

As a result of the closing, Abercrombie now expects to take
additional charges of $65 million, which it will recognize
largely during the remaining three quarters of its fiscal
year.

Abercrombie also amended its existing credit agreement,
allowing it to exclude some of the Ruehl-related charges from
certain ratio calculations.

In connection with those changes, Abercrombie agreed to a
reduction in the amount of available credit to $350 million
from $450 million, an increase in the facility fee and
borrowing costs and a capital expenditure limit of $600 million
for this and the next fiscal year.

Jeffries was confident the company would continue to
generate enough cash from operations to fund its liquidity
needs and said the changes were made out of prudence.

"In light of the one-time costs associated with exiting
Ruehl and the current uncertain economic conditions, we believe
it is prudent to make these changes to give us significant
cushion in our debt covenants," Jeffries said.

Abercrombie shares were up $1.19, or 4.6 percent, at $26.99
on the New York Stock Exchange on Wednesday.
(Reporting by Martinne Geller; editing by Matthew Lewis and
Andre Grenon)