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Sales up 9% at Abercrombie & Fitch in Q3 FY'13
20
Nov '12
Abercrombie & Fitch Co. reported unaudited results which reflected net income of $71.5 million and net income per diluted share of $0.87 for the thirteen weeks ended October 27, 2012, compared to net income of $50.9 million and net income per diluted share of $0.57 for the thirteen weeks ended October 29, 2011.

Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said: "These significantly improved financial results reflect progress on several fronts over the past quarter. Our US chain store business posted healthy growth on top of a strong quarter a year ago, and we saw sequential trend improvement in our international business. Our principal focus remains to execute against our key strategic initiatives to leverage our iconic brands and to continue to be judicious in our use of our shareholders' capital to drive long-term shareholder value."

Third Quarter Summary

Net sales for the thirteen weeks ended October 27, 2012 increased 9% to $1.170 billion from $1.076 billion for the thirteen weeks ended October 29, 2011. Total U.S. sales, including direct-to-consumer sales, were approximately flat at $818.6 million. Total international sales, including direct-to-consumer sales, increased 37% to $351.1 million. Total Company direct-to-consumer sales, including shipping and handling, increased 20% to $158.3 million.

Total comparable store sales for the quarter decreased 3% relative to last year. By brand, comparable store sales decreased 4% for Abercrombie & Fitch, 3% for abercrombie kids, and 1% for Hollister Co. Total sales by brand were $440.0 million for Abercrombie & Fitch, $99.8 million for abercrombie kids and $602.5 million for Hollister Co.

Within direct-to-consumer, including shipping and handling revenues, US sales were up 15% and international sales were up 31%.

The gross profit rate for the third quarter was 62.5%, 240 basis points higher than last year's third quarter gross profit rate. The increase in the gross profit rate was driven by a decrease in average unit cost and an international mix benefit, partially off-set by a slight decrease in average unit retail and an adverse effect of exchange rates.

Stores and distribution expense, as a percentage of net sales, decreased to 42.5% from 42.9% for the third quarter of last year. The decrease in the stores and distribution rate was primarily the result of lower store pre-opening costs.  In addition, prior year stores and distribution expense included approximately $4 million of accelerated depreciation related to the consolidation of the distribution centers.

Marketing, general and administrative expense for the third quarter was $123.4 million, compared to $107.8 million during the same period last year. The increase in marketing, general and administrative expense was due to increases in marketing, incentive compensation related expenses, IT and other expenses.

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