UPDATE 2-Abercrombie & Fitch cuts profit forecast as sales crater
By Phil Wahba
May 24 (Reuters) - Abercrombie & Fitch Co on Friday reported a steeper-than-expected drop in first-quarter comparable sales, blaming inventory shortages, and slashed its profit forecast, sending the teen clothing retailer's shares down 10 percent.
Sales at stores open at least a year, combined with online sales, fell 15 percent. The decline was most pronounced at the Hollister chain, the company's largest. But Abercrombie lost business under all its banners, including its direct-to-consumer operations, which include e-commerce.
On a conference call, Chief Executive Mike Jeffries said delays in getting spring merchandise into stores accounted for most of the sales decline.
To better compete with the "fast-fashion" chains like Sweden's H&M that have found favor with teens and young adults, Abercrombie is changing how it orders merchandise to allow for quicker turnaround.
"It took a little bit longer than anticipated to flow in some of our spring deliveries," Jeffries told analysts, adding that the company had also been too cautious in how much it ordered. He said the inventory issue had been largely resolved.
Abercrombie said it expects comparable sales to be slightly down for the remainder of the year.
Overall sales in the first quarter, ended May 4, fell 9 percent to $838.8 million, well below analysts' average forecast of $941.3 million, according to Thomson Reuters I/B/E/S.
Abercrombie rivals American Eagle Outfitters Inc and Aeropostale Inc also reported poor results this week.
The end of a temporary cut in payroll taxes and a delay in tax refunds in the United States have hurt sales at many retailers. It was particularly painful for teen retail chains, whose patrons often rely on allowances from parents.
Comparable sales, comprised of same-store sales and online sales, fell 18 percent at Hollister and 13 percent at Abercrombie's namesake chain. The company got some relief from a jump in sales outside the United States.
The company said its first-quarter loss was $7.2 million, or 9 cents per share, 4 cents worse than analysts expected. Its year-earlier loss was $21.3 million, or 25 cents per share.
Abercrombie lowered its profit forecast for the full year by 20 cents, to a range of $3.35 to $3.45 per share.
Shares of Abercrombie were trading at $48.93 at mid-morning. Aeropostale, which late Thursday said its first-quarter same-store sales fell 14 percent, was down 8.7 percent.