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Abercrombie & Fitch posts 1% drop in Q2 FY'13 sales
22
Aug '13
Abercrombie & Fitch Co. reported unaudited second quarter results which reflected net income of $11.4 million and net income per diluted share of $0.14 for the thirteen weeks ended August 3, 2013, compared to net income of $17.1 million and net income per diluted share of $0.20 for the thirteen weeks ended July 28, 2012. Net income per diluted share for the thirteen weeks ended August 3, 2013 includes $0.02 in charges related to the implementation of the on-going profit improvement initiative.

Second Quarter Summary

Net sales for the thirteen weeks ended August 3, 2013 decreased 1% to $945.7 million from $951.4 million for the thirteen weeks ended July 28, 2012. Including direct-to-consumer, total U.S. sales decreased 8% to $597.3 million. Including direct-to-consumer, total international sales increased 15% to $348.4 million. Total Company direct-to-consumer sales, including shipping and handling, increased 21% to $154.3 million.

Total comparable sales for the quarter, including direct-to-consumer sales, decreased 10% with comparable U.S. sales decreasing 11% and comparable international sales decreasing 7%. Within the quarter, comparable sales were weakest in July.

By brand, including direct-to-consumer, comparable sales decreased 6% for Abercrombie & Fitch, decreased 3% for abercrombie kids, and decreased 13% for Hollister Co. Total sales by brand were $356.6 million for Abercrombie & Fitch, $76.0 million for abercrombie kids and $488.5 million for Hollister Co.

Due to the 53rd week in Fiscal 2012, second quarter comparable sales are compared to the thirteen week period ended August 4, 2012. The thirteen week period ended August 4, 2012 included approximately $44 million of additional sales versus the reported thirteen-week period ended July 28, 2012.

The gross profit rate for the second quarter was 63.9%, 160 basis points higher than last year's second quarter gross profit rate.

Stores and distribution expense for the second quarter was $471.7 million or 49.9% of net sales, up from $458.1 million or 48.1% of net sales last year.  As a percentage of sales, expense savings in store payroll, store management and support and other stores and distribution expense were more than offset by the deleveraging effect of negative comparable sales and higher direct-to-consumer expense.

Marketing, general and administrative expense for the second quarter was $117.6 million, a 6% increase compared to $111.3 million last year. The increase in marketing, general and administrative expense was primarily driven by increases in consulting and other services, including $2.6 million in charges related to the implementation of the profit improvement initiative.

The effective tax rate for the second quarter was 34.7% compared to 27.3% last year.

During the second quarter of Fiscal 2013, the Company repurchased approximately 2.0 million shares of its common stock at an aggregate cost of approximately $99.5 million.

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