By Phil Wahba
Aug 22 (Reuters) - Abercrombie & Fitch Co reported comparable sales and profit far below Wall Street expectations on Thursday, blaming a drop in store visits by shoppers, and the teen retailer said business would decline even more during the current back-to-school quarter.
The company said comparable sales, including those online and at stores open at least a year, fell 10 percent in the second quarter ended Aug. 3. Analysts had expected a drop of just 2.5 percent.
Abercrombie also issued a weak profit forecast, and its shares fell as low as $37.21, their lowest since October 2010. By midmorning they were at $38.35, down 18 percent.
The company and rivals Aeropostale Inc and American Eagle Outfitters Inc have struggled as young shoppers appear less interested in their logo-centric clothes than the variety of merchandise at chains like Zara, Forever 21 and H&M.
“One generation of customers has moved on, and the next generation doesn’t see Abercrombie as cool,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business.
Hollister Co, Abercrombie’s largest chain, felt the second-quarter drop in business most acutely, with a 13 percent decline in comparable sales. They were down 6 percent at the company’s namesake stores.
Back in May, Abercrombie blamed poor comparable sales in the first quarter on its inability to get enough merchandise on shelves fast enough, and it forecast a small decline for the second quarter.
Overall, revenue in the latest quarter fell 1 percent to $945.7 million, well below the $996.2 million analysts expected. The one bright spot was international revenue, which rose 15 percent, including online sales.
Abercrombie Chief Executive Officer Mike Jeffries said teen shoppers were feeling more of a pinch than other consumers.
“Consumers in general are feeling better about the overall economic environment,” Jeffries told Wall Street analysts on a call. “It is less the case for the young consumer.”
Abercrombie expects a profit of 40 cents to 45 cents a share for the third quarter, while analysts anticipated $1.06. The company said it would not give projections beyond then, citing uncertainty about customer traffic.
For the second quarter, the company said net income fell to $11.4 million, or 14 cents per share, from $17.1 million, or 20 cents per share, a year earlier.
Excluding charges from a cost-saving effort, earnings were 16 cents per share, well below Wall Street forecasts for 28 cents.
Aeropostale is due to report quarterly results after the market closes on Thursday. American Eagle reported on Wednesday, issuing a weak forecast.