February 22, 2013 / 1:46 PM / in 5 years

CORRECTED-UPDATE 1-Abercrombie Q4 comparable sales fall, profit tops view

(Replaces 6th paragraph to reflect old accounting methods and corrects EPS comparison in 7th paragraph)

Feb 22 (Reuters) - Abercrombie & Fitch Co reported a drop in fourth-quarter comparable sales on Friday as the youth fashion retailer continued to struggle overseas and its Hollister chain showed weakness during the holiday period.

The company forecast profit below Wall Street expectations, but the latest quarterly earnings topped estimates. The retailer also boosted its dividend.

Sales at stores open at least a year and online fell 1 percent. They were flat for the namesake chain and fell 2 percent at Hollister. They were little changed in the United States and down 3 percent abroad.

Overall sales rose 10.5 percent to $1.47 billion for the 14 weeks ended Feb. 2, boosted by an extra week compared to the year earlier period. The result was below the $1.49 billion Wall Street was projecting, according to Thomson Reuters I/B/E/S.

Despite continued sluggish sales, Abercrombie’s profit was lifted by a decrease in product costs, sending its gross profit margin up 3.9 percentage points to 63.4 percent of sales.

Under an old accounting method for inventory, the company earned $173.2 million, or $2.15 per share, for the 14-week period, compared with $19.6 million, or 22 cents per share, a year earlier for a 13-week period. Abercrombie announced a change in accounting for inventory that will be marked down permanently.

Excluding an impairment charge, Abercrombie had a profit of $2.21 a share, 25 cents better than expected, according to Thomson Reuters I/B/E/S.

The company raised its quarterly dividend to 20 cents per share from 17.5 cents.

For the fiscal year that began at the start of February, Abercrombie projected earnings of $3.35 to $3.45 a share for fiscal 2013, below estimates of $3.63. (Reporting by Phil Wahba in New York and Maria Ajit Thomas in Bangalore; Editing by Jeffrey Benkoe)

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