Abercrombie & Fitch profit tops view

Customers attend the official opening of a new Abercrombie & Fitch store in central London March 22, 2007.

NEW YORK (Reuters) - Teen apparel retailer Abercrombie & Fitch Co (ANF.N) reported higher quarterly profit on Friday, topping Wall Street estimates, as a lower tax rate and better gross profit helped offset the impact of lower same-store sales.

The seller of casual clothes like jeans and T-shirts for teens also affirmed its earnings outlook for the first half of the year.

Abercrombie said net profit rose 3 percent to $62.1 million, or 69 cents per share, in the first quarter ended on May 3, from $60.1 million, or 65 cents per share, in the year-ago period.

Analysts on average were expecting 66 cents per share, according to Reuters Estimates.

The gross profit rate was 66.8 percent, up 120 basis points from last year, as higher initial markups and a lower rate of lost merchandise offset deeper markdowns, which were needed to lure cash-strapped U.S. consumers to spend in a weak economy.

Sales at stores open at least a year, the key retail gauge known as same-store sales, fell 3 percent -- nearly double analysts' average estimate for a 1.6 percent decline, according to Thomson Reuters data.

Net sales were up 8 percent to $800.2 million.

In addition to the flagship Abercrombie & Fitch chain, the New Albany, Ohio-based company operates Hollister, abercrombie and RUEHL stores, which respectively sell surf-inspired fashions, clothes for children and clothes for young adults.

Abercrombie recently opened the first store in its Gilly Hicks underwear chain.

Same-store sales rose 3 percent at Abercrombie & Fitch stores, but fell 7 percent at abercrombie, 8 percent at Hollister and 17 percent at RUEHL.

The company said its first-quarter tax rate was 36.8 percent, down from 37.7 percent last year.

The retailer said it still expects net income for the first half of fiscal 2008 to range from $1.61 to $1.65 per share. The low end of that range reflects a 2 percent decline in same-store sales for the current quarter, it said.

Abercrombie also shaved its 2008 expansion plans, saying it now expects to increase its stores' gross square-footage by 10 percent this year, down from its prior estimate of 11 percent.

It said full-year capital expenditures should range from $410 million to $415 million, with about $290 million of that dedicated to building new stores and remodeling existing stores.

The company plans to open 104 new stores this year in North America and four in the United Kingdom.

(Reporting by Martinne Geller; Editing by Jeffrey Benkoe and Dave Zimmerman)