UPDATE 1-Abercrombie posts lower profit, cuts forecast

Fri Nov 14, 2008 8:00am EST

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ATLANTA, Nov 14 (Reuters) - Abercrombie & Fitch Co (ANF.N) reported lower quarterly profit and cut its full-year outlook on Friday as consumers reduced their spending and the teen retailer marked down prices amid a deepening economic crisis.

The company cut its capital spending for this year, saying it would now open fewer stores than previously planned.

Net income fell to $63.9 million, or 72 cents per diluted share, in the third quarter ended on Nov. 1, from $117.6 million, or $1.29 per share, a year earlier.

Analysts on average had been expecting earnings of 70 cents per share, according to Reuters Estimates.

Abercrombie had cut its third-quarter earnings view last month.

Sales fell 8 percent to $896.3 million, below analysts' estimates of $920.3 million. Same-store sales, a key measure of retail strength, fell 14 percent.

Abercrombie has seen a string of same-store sales declines in recent months amid the U.S. economic downturn. Fewer people are buying clothing, and Abercrombie's higher pricing and aversion to discounts means that some shoppers have gravitated to lower-cost rivals like Aeropostale (ARO.N).

Abercrombie said it expected profit of $1 to $1.05 a share for the fourth quarter, assuming same-store sales fall 26 percent. Analysts were expecting $1.59 a share.

For the full year, Abercrombie forecast earnings of $3.27 to $3.32 a share. In August, it said it expected $4.95 to $5. The analysts' average outlook was $3.83.

Abercrombie also said it now plans capital spending of $390 million to $395 million for this fiscal year, down from $405 million to $410 million it forecast in August, as it opens fewer stores than it previously planned.

The company said it would boost its gross square footage by about 9 percent, down from growth of about 9 percent to 10 percent it forecast a few months ago. (Reporting by Karen Jacobs; Editing by Lisa Von Ahn)

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