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UPDATE 3-Abercrombie sales fall for 13th straight qtr, shares slump
May 26, 2016 / 12:02 PM / 2 years ago

UPDATE 3-Abercrombie sales fall for 13th straight qtr, shares slump

* 1st-qtr sales $685.5 mln vs est. $710.3 mln

* Loss $0.59/share vs est. $0.51

* Shares plunge as much as 13 pct (Adds conference call details, analyst comments; updates shares)

By Subrat Patnaik

May 26 (Reuters) - Abercrombie & Fitch Co posted its 13th straight quarter of sales decline, hit by lower customer traffic, as the apparel retailer struggles in a tough market that forced rivals Aeropostale Inc and American Apparel Inc into bankruptcy.

Shares of the company, whose brands include Hollister and abercrombie kids, plunged as much as 13 percent in morning trading on Thursday.

Abercrombie and other U.S. apparel retailers have been hurt by fierce competition from fast-fashion retailers such as H&M and Inditex’s Zara as well as from online retailers such as Amazon.com Inc.

“Weather, fashion, a shift in consumption patterns and the cannibalism of e-commerce provide an explanation for at least a portion of the weakness (in Abercrombie’s results),” Stifel Nicolaus and Co analyst Richard Jaffe wrote in a note.

Abercrombie’s comparable sales at stores open at least a year fell 4 percent in the first quarter, surprising analysts, who had expected a 1.2 percent rise, according to research firm Consensus Metrix.

“...while a marked improvement on past collections, early spring and summer ranges were fairly lackluster - especially at Abercrombie (brand),” research firm Conlumino’s Chief Executive Neil Saunders said.

Department store operators Macy’s Inc and Kohl’s Corp also saw weak apparel demand in the quarter, mainly due to unseasonable weather.

BETTER SECOND HALF

Abercrombie expects the second quarter to remain challenging, but results are seen improving in the second half of the year as its turnaround efforts take hold, Executive Chairman Arthur Martinez said.

Abercrombie, founded in 1892, has been remodeling its Hollister stores, hiring designers and executives from top brands to keep up with latest trends and moving away from logo-centric designs to woo back shoppers.

The retailer’s 24 remodeled Hollister stores showed “double-digit lift in traffic and sales,” Chief Merchandising Officer Fran Horowitz said on a conference call.

Abercrombie expects to remodel about 50 more Hollister stores by the end of the year, most of them in the current quarter.

Total revenue fell 3.4 percent to $685.5 million in the quarter ended April 30, missing the average analyst estimate of $710.3 million, according to Thomson Reuters I/B/E/S.

Although the net loss attributable to Abercrombie narrowed to $39.6 million, or 59 cents per share, it was bigger than the 51 cents per share analysts had expected.

Abercrombie’s shares were down 12.6 percent at $21.92.

Up to Wednesday’s close, the stock had risen by about a quarter in the past 12 months.

Reporting by Subrat Patnaik in Bengaluru; Editing by Kirti Pandey

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