Abercrombie & Fitch reports 6% fall in sales for previous fiscal
Abercrombie & Fitch Co. reported unaudited results which reflected net income of $68.4 million and net income per diluted share of $0.78 for the thirteen weeks ended January 31, 2009, including a non-cash, after-tax charge of $0.21 associated with the impairment of store-related assets and a charge to tax expense of $0.11 related to the execution of the Chairman and Chief Executive Officer's new employment agreement.
The Company also reported net income of $272.3 million and net income per diluted share of $3.05, after the above charges, for the fifty-two week fiscal year ended January 31, 2009.
Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said:
"The fourth quarter proved to be a catastrophe for the retail industry; a nightmare that included unprecedented promotional activity by other retailers in the malls and consumers who continued to show reluctance to spend, especially for premium brands. However, despite the unprecedented volatility, we are satisfied with our results for the quarter.
Our comparable store sales decrease was lower than we had projected, our earnings per diluted share, excluding the effect of one-time items, exceeded our guidance and we maintained the aspirational nature of all of our brands. As we look toward 2009, we continue to see a tumultuous environment. We will again rely on our ability to manage the aspects of the business that are under our control and continue to protect and position our brands for more promising times."
Fourth Quarter and Fiscal Year 2008 Financial Results
Net sales for the thirteen weeks ended January 31, 2009 decreased 19% to $998 million from $1.229 billion for the thirteen weeks ended February 2, 2008. Total Company direct-to-consumer net sales decreased 12% to $95.1 million for the thirteen week period ended January 31, 2009, compared to the thirteen week period ended February 2, 2008.
Total Company fourth quarter comparable store sales decreased 25%. For the fifty-two week fiscal year ended January 31, 2009, the Company reported a net sales decrease of 6% to $3.54 billion from $3.75 billion for the fifty-two week fiscal year ended February 2, 2008. Total Company direct-to-consumer net sales increased 5% to $271.0 million for the fifty-two week fiscal year ended January 31, 2009, compared to the fifty-two week fiscal year ended February 2, 2008. Fiscal 2008 comparable store sales decreased 13%.
The gross profit rate for the quarter was 64.4%, 280 basis points lower than last year. The decrease in gross profit rate was attributable to an increase in markdowns taken to clear through seasonal inventory. For Fiscal 2008, the gross profit rate was 66.7% versus 67.0% last year.
Stores and distribution expense for the quarter, as a percentage of sales, increased to 42.3% from 31.6%. The Company was able to achieve reductions in store payroll, but at less than the rate of the sales decline. In addition, the Company recorded a $30.6 million non-cash impairment charge related to long-lived assets associated with 11 Abercrombie & Fitch stores, six abercrombie stores, three Hollister stores and nine RUEHL stores. The majority of the $30.6 million impairment charge is associated with the nine RUEHL stores. For Fiscal 2008, stores and distribution expense, as a percentage of sales, increased to 42.7% versus 37.0% last year.