Abercrombie & Fitch 3Q profit falls 46 percent

NEW ALBANY, Ohio (AP) -- Teen apparel retailer Abercrombie & Fitch Co. said Friday the pullback in consumer spending drove its third-quarter profit down 46 percent and offered fourth-quarter guidance below expectations.

The New Albany, Ohio-based company's profit slid to $63.9 million, or 72 cents per share, from $117.6 million, or $1.29 per share, last year.

Revenue fell 8 percent to $896.3 million from $973.9 million a year ago.

Analysts polled by Thomson Reuters expected profit of 71 cents per share on revenue of $909 million.

Abercrombie has kept its focus on international investment and kept prices steady amid a difficult economic environment, as other teen apparel retailers such as American Eagle Outfitters Inc. and Aeropostale Inc. have focused on value and promotion.

As a result, sales have weakened. Same-store sales, or sales in stores open at least one year, fell 14 percent overall during the quarter, including an 8 percent drop at namesake stores, a 20 percent drop at abercrombie, its children's concept, an 18 percent decline at surf-themed Hollister Co. stores and a 25 percent drop at Ruehl stores, which are aimed at an older demographic.

"Our third quarter financial results reflect a pull back in consumer spending and a difficult economic environment that is having an affect on all retailers," said Mike Jeffries, chief executive chairman, in a statement.

However, he said the company is committed to the "aspirational positioning" of its brands and international expansion.

Due to weak trends so far in November, Abercrombie said it expects same-store sales will worsen in the fourth quarter and could be down about 26 percent. As a result, it offered fourth-quarter earnings guidance between $1 and $1.05 per share. Analysts expected $1.57 per share.

For the year, the company predicts earnings of $3.27 to $3.32 per share, while analysts expect $3.81 per share.

Well I don't know.. It seems weird that these are the results I'm seeing, 12 oaks hasn't done too bad across all the brands there.

Hmm, I guess the poor performance at the other ANFs adds up.

Still, I hope there's good clearance left, although judging by the roosevelt jacket doesn't seem like there will be good clearance for HOT selling items.

It is so depressing, I'm anxiously waiting for the Q3 conference call transcripts to be posted online, it should be interesting to read. I stil think raising the prices is kililng A&F, just because you want to be aspirational doesn't mean you should raise prices during a time like this, why not just keep them as is and don't take any drastic clearancing? It's not like I'm saying to do what American Eagle did and have a "buy one get one half off the entire store" deal, I'm just saying don't raise prices. I'm by no means an expert on these things, but I am a customer and an employee and can hear what other shoppers are saying about our brands.

Not good at all. Our entire district has been negative for I don't know how many weeks now. The relatively same district that's for A&F is doing even worse than us.

Aspirational? LOFL!

I'm waiting for the transcript from the call too. The following has been posted on the newswires - I expect they were messages relayed on the call:

14:06 14Nov08 RTRS-BRIEF-Abercrombie expects higher markdown rate in 4Q
ATLANTA, Nov 14 (Reuters) - Abercrombie & Fitch Co <ANF.N>:
* Says expects higher markdown rate in order to clear seasonal goods by end of
fourth quarter
* Says expects drop in store staffing levels in response to lower sales in fourth quarter

"aspirational positioning" = customer pulls down pants, bends over, and grabs ankles.

^^that's exactly what i was going to say, higher prices just means they're going to have to mark them down even more than in past years to eventually move the goods.

people aren't going to be fooled and be like, "oh, this hoodie used to be 79.50 at full price, now it's 100 at full price, so at 69.90 on clearance it's a steal!"

also, if the 4Q for them ends january 31st, they may mark things down at a faster rate than before to get the an optimal amount of sales jammed in by the 31st.

analysts are calling for a deep recession that's going to last for a couple of years so we're not out of the woods yet. raising prices will keep anf as a high-end retailer but we won't know if that strategy will work until they start closing stores.

"aspirational positioning"

Wow, and what a uniquely American mindset. "We have a huge problem; how do we solve it? More of what doesn't work! Maybe if we just up prices a bit more we'll tap in to some ultra exclusive crowd with cash to burn."

Well I can see how low sales and higher prices work - actually
IMHO the key is in the fact that people shopping at A&F have a "per item" attitude - not a "per money" one.

Articulate:

We go through a "how many unnecessary wowens am I buying" thing - not a "how much money did a put in to purchase a certain number of unnecessary wowens".

Perception is in the number of items

Recession knocks in - for A&F customers this may mean buying three fleece full price instead of six. A&F raises the price and limits the loss.
People who decide they will only buy a tee or two, will still buy a tee or two, no matter if they almost cost as twice as they did one year ago.
They will not stop buying tees because the recession is not "yet" so big to make you disconnect from shopping at all. And when it will be, people won't shop at A&F anymore - no matter if the tees will be cheap or expensive - they won't have 30 bucks just as they won't have 46.

as the consumer, we can vote with our wallets or pocketbooks. if you don't like it, don't buy it. let anf worry about marketing, expenses, rent, designs, etc.

People are still going to be fooled. But maybe they still can't afford it.

The stuff will still sell on clearance and ANF will still make money on it, just less money than if it sold at full price.

If things keep going badly, I think the bigger question is why not adjust their strategy slightly. Just like I feel that Jeffries' ban on advertising is hurting Ruehl immeasurably, maybe it's the right time to revisit the ban on "sales" and do a bounceback certificate like the old days.

idk how anf will compete when you see the other high end stores like macys and nordstroms having the big sales all over the place. i was just at martin and osa, and they werre like "denim and sweaters are 30% off, and sale items are an additional 25% off" WITH a coupon they sent me in the mail for an additional 30% off. so basically i can get pairs of their 100 buck jeans for 40. what has anf done to attract more customers?

Maybe tshirts that are not 46cnd or 36us would help out

hey, you just 4 of them, can't be that bad of an idea!

ftw!

Zilch. What they don't seem to realize is that their brand has become common and household. Nobody "aspires" to be the Abercrombie kid anymore and upping prices isn't going to make that suddenly materialize again (if it ever existed).

For some reason, I always find it amusing when I see ##CAD (or in this case ##cnd)

i got the answer to allllll of these problems....... make cool shit again w. cool details.. simple

Wait till christmas time...there stocks will go up.