August 24, 2017 / 11:44 AM / a year ago

Abercrombie posts much smaller loss than expected, shares soar

REUTERS - U.S. teen apparel retailer Abercrombie & Fitch Co posted a much smaller than expected quarterly loss on Thursday, helped by robust demand for its Hollister surfwear brand, sending the company’s shares soaring as much as 18 percent.

A person carries a bag from the Abercrombie & Fitch store on Fifth Avenue in Manhattan, New York City, U.S., February 27, 2017. REUTERS/Andrew Kelly/Files

Hollister has been driving Abercrombie’s results in recent quarters, while the company’s namesake brand, which sells a wider range of apparel, has struggled.

Other established teen apparel companies have also struggled in the face of changing consumer tastes, the rise of fast-fashion retailers such as H&M and Inditex’s Zara and growing pressure from Inc.

To win back shoppers deserting malls, Abercrombie has remodeled its stores and slashed prices, particularly in its Hollister business, which it also began revamping as a fast-fashion brand.

Hollister posted a 5 percent rise in sales at established stores in the second quarter ended July 29, topping analysts’ average estimate for a 2.9 percent increase, according to Consensus Metrix.

Same-store sales at Abercrombie’s namesake brand continued to decline, falling 7 percent in the latest quarter, but besting the 8.5 percent decrease expected by analysts, according to Consensus Metrix.

The company said total sales at established stores fell 1 percent. That result, too, topped expectations.

Abercrombie’s upbeat results come more than a month after it ended talks to sell itself. The company had said in May it was in talks with several bidders regarding a potential sale.

Net loss attributable to Abercrombie widened to $15.5 million, or 23 cents per share in the second quarter, from $13.1 million, or 19 cents per share, a year earlier.

Excluding one-time items, the company posted a loss of 16 cents per share. Analysts on average had expected a loss of 33 cents, according to Thomson Reuters I/B/E/S.

Net sales fell slightly to $779.3 million, also handily beating analysts’ expectations of $758.6 million.

New Albany, Ohio-based Abercrombie’s shares were up 13 percent at $10.83 in premarket trading.

Teen apparel maker American Eagle Outfitters Inc on Wednesday posted better-than-expected results in a glum retail environment, helped by strong demand for its jeans and Aerie line of lingerie.

Signage is seen at the Abercrombie & Fitch store on Fifth Avenue in Manhattan, New York City, U.S., February 27, 2017. REUTERS/Andrew Kelly/Files

Reporting by Vibhuti Sharma and Karina Dsouza in Bengaluru; Editing by Sai Sachin Ravikumar

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