(Adds CEO comments, analyst comment, background, Aeropostale,
updates share price)
By Aditi Shrivastava
Nov 21 Teen clothing retailer Abercrombie &
Fitch Co, struggling to keep up with the fickle tastes
of young shoppers, said it will offer more styles faster next
year but won't move away entirely from its "logo-based" apparel.
A&F, whose shares were up 1.5 percent in early trading,
reported a third-quarter loss on Thursday as comparable-store
sales fell for the seventh straight quarter.
Analysts have said the company's logo-focused preppy apparel
has fallen out of favor with teens who are looking for more
fashionable and cheaper alternatives.
But Chief Executive Mike Jeffries said the company's mission
was to make that category "cooler."
A&F warned of a "significant" erosion in gross margins and a
low double-digit percentage fall in comparable sales as it
enters the holiday shopping quarter with excess inventory.
Jeffries said he expected to see the benefits of the
company's plan to offer a wider variety of clothing and more
frequent changes in stock by next year's back-to-school season.
So-called "fast fashion" retailers such as H&M and Forever
21 have been taking market share from more traditional teen
closing retailers such as A&F that have stuck with more basic
styles built around their brand name.
Inventory management, or balancing orders with demand, has
been a major concern for A&F, forcing it to offer discounts that
have eaten into earnings.
Retailers ranging from department store operator Macy's Inc
to apparel retailers such as Urban Outfitters are
offering huge discounts to help shift stock during what is
expected to be the toughest holiday shopping season since 2008.
But teen clothing sellers such as A&F and Aeropostale
Aeropostale Inc are discounting the most, due in part to
high unemployment rates among the young but also because teens
are spending more on high-cost items such as mobile phones,
gaming consoles and tablets.
Aeropostale shareholder Crescendo Partners on Thursday urged
the company to sell itself after three quarters of losses.
"In our opinion, additional steps need to be taken (by A&F),
especially in the area of merchandise and design," said Stifel
Research analyst Richard Jaffe, who maintained his hold rating
on the stock.
CEO Jeffries has stirred controversy in the past by
suggesting the company's clothes were made for "cool" and
"attractive" kids and not for "fat" people. A&F has said it will
now offer women's clothing in larger sizes by next spring.
A&F reported a net loss of $15.6 million, or 20 cents per
share, for the third quarter ended Nov. 2 compared with net
income of $84.0 million, or $1.02 per share, a year earlier.
Excluding items the company earned 52 cents per share,
including a tax benefit of 6 cents per share.
Net sales fell 12 percent to $1.03 billion while total
comparable sales, including online sales, fell 14 percent.
Comparable sales fell 13 percent at Abercrombie & Fitch
outlets, 4 percent at Abercrombie Kids and 16 percent at the
company's Hollister chain of teen clothing stores.
The company announced the total comparable store sales
figures earlier this month.
A&F shares were up 1.6 percent at $35.61 in early morning
trading on the New York Stock Exchange on Thursday.
(Editing by Joyjeet Das and Ted Kerr)