* Comparable sales fall 14 pct in third quarter
* Holiday quarter comparable sales to be down in low double
* Cuts full-year adjusted earnings/share view to $1.40-$1.50
vs est $1.96
* Shares fall as much as 15 pct in after-market trading
By Maria Ajit Thomas
Nov 5 Abercrombie & Fitch Co reported
another double-digit drop in quarterly same-store sales and
warned of a tough holiday season, as the teen retailer struggles
with the changing tastes of young shoppers.
Shares of the company, which also slashed its full-year
adjusted profit forecast, fell 15 percent after the bell.
Abercrombie's same-store sales declined 14 percent in the
third quarter, its seventh straight quarterly decline. They fell
10 percent in the second quarter ended Aug. 3.
The company expects a low double-digit decrease in
comparable sales for the current quarter, which includes the
critical December selling season.
"The holiday is setting up to be incredibly challenging for
softline retailers specifically those that cater to a teen
customer," SunTrust Robinson Humphrey analyst Pamela Quintiliano
She cited the six fewer shopping days this season, a strong
electronics cycle with the launch of new videogame consoles and
the new iPad, and the lack of must-have fashion for the expected
Young shoppers also increasingly prefer the trendier and
more affordable merchandise offered by "fast fashion" chains
such as Inditex's Zara and Forever 21, shying away from
the logo-centric clothes at Abercrombie and rivals Aeropostale
and American Eagle.
Lower levels of teen employment are also reducing shopping
budgets for young shoppers.
"Our results for the third quarter reflect continued
top-line challenges, with overall spending among younger
consumers remaining weak," Abercrombie Chief Executive Mike
Jeffries said in a statement.
The company said it expects adjusted earnings for the full
year of $1.40-$1.50 per share, down from its forecast of
$3.15-$3.25 per share in May.
Analysts on average were expecting a profit of $1.96 per
share, according to Thomson Reuters I/B/E/S.
Abercrombie warned of significant gross margin erosion in
the fourth quarter as it discounts heavily to clears excess
Net sales fell 12 percent to $1.03 billion in the third
quarter ended Nov. 2, missing analysts' average estimates of
The retailer said it will incur pre-tax charges of about $90
million-$100 million in the quarter related to the restructuring
of its Gilly Hicks intimate apparel brand.
Abercrombie said it will close all of its standalone Gilly
Hicks stores and offer the brand through its Hollister stores
The company released its forecast ahead of a presentation to
analysts on Wednesday.
Shares were down 5 percent at $36.10 after the bell. They
had closed at $38.31 on the New York Stock Exchange on Tuesday.
The stock has lost a fifth of its value this year through