abercrombie kids comparable store sales up; gaining traction

20 Aug '10

5 min read

Abercrombie & Fitch Co. reported unaudited results which reflected net income of $19.5 million and net income per diluted share of $0.22 for the thirteen weeks ended July 31, 2010, compared to a net loss of $26.7 million and a net loss per basic and diluted share of $0.30 for the thirteen weeks ended August 1, 2009.

Net income for the thirteen weeks ended July 31, 2010 included a non-cash asset impairment charge associated with expected store closures of $0.02 per diluted share. Net loss for the thirteen weeks ended August 1, 2009 included a net loss per basic and diluted share of $0.21 from discontinued operations.

Second Quarter Sales Highlights

• Total Company net sales, including direct-to-consumer net sales, increased 17% to $745.8 million
• Total Company domestic net sales, including direct-to-consumer net sales, increased 8% to $612.6 million
• Total Company international net sales, including direct-to-consumer net sales, increased 85% to $133.2 million
• Comparable store sales increased 5%
• Total Company direct-to-consumer net merchandise sales increased 50% to $69.0 million
• Abercrombie & Fitch net sales of $335.6 million; Abercrombie & Fitch comparable store sales increased 8%
• abercrombie kids net sales of $79.1 million; abercrombie kids comparable store sales increased 3%
• Hollister Co. net sales of $322.2 million; Hollister Co. comparable store sales increased 2%

Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said:
"We are pleased with the progress we are making as we pursue our strategy of leveraging the international appeal of our iconic brands to build a highly profitable, sustainable, global business. We achieved growth both domestically and internationally during the quarter. We are gaining traction and are very excited by what we see ahead of us."

Second Quarter Financial Results
Net sales for the thirteen weeks ended July 31, 2010 increased 17% to $745.8 million from $637.2 million for the thirteen weeks ended August 1, 2009. Total Company direct-to-consumer net merchandise sales increased 50% to $69.0 million for the thirteen week period ended July 31, 2010. Total Company second quarter comparable store sales increased 5%.

The gross profit rate for the second quarter was 65.1%, 150 basis points lower than last year's second quarter gross profit rate. The decrease in gross profit rate was primarily driven by a 15% decrease in average unit retail.

Stores and distribution expense, as a percentage of net sales, decreased to 48.9% from 52.1% for the second quarter. For the thirteen weeks ended July 31, 2010, stores and distribution expense included a non-cash pre-tax asset impairment charge associated with expected store closures of $2.2 million, or 0.3% of net sales. The decrease in the stores and distribution expense rate was primarily driven by lower store occupancy costs as a percentage of net sales.

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