(Reuters) - Teen apparel retailer Abercrombie & Fitch Co (ANF.N) said the factors that led to a drop in sales in the fourth quarter — a strong dollar and weak demand for clothing featuring its name and logo — would persist in the first half of its fiscal year.
Abercrombie & Fitch shares fell as much as 15 percent to a six-year low of $20.37 in morning trading on Wednesday.
The former teen favorite is struggling to revive sales of its namesake and Hollister brands and focus less on its logo-centric clothing, which has fallen out of fashion.
The company, whose profit fell by a third in the fourth quarter ended Jan. 31, said it expected the negative impact from reduced “logo sales” to modestly abate in the first half of the fiscal year and neutralize in the second half.
Teen apparel retailers such as Abercrombie, American Eagle Outfitters Inc (AEO.N) and Aeropostale Inc ARO.N have suffered as young American shoppers shift to trendier and cheaper offerings from “fast fashion” chains such as Forever 21, Inditex’s (ITX.MC) Zara and H&M (HMb.ST).
American Eagle, which was quicker to move away from logo-centric clothes and take on the fast-fashion retailers, reported both higher profit and sales for the quarter.
Abercrombie’s efforts to redefine its offerings have included more denim styles and floral print dresses.
“We believe customers are responding favorably to the improved fashion assortments but the company needs to be more aggressive with their fashion buys, making bigger bets,” Stifel Nicolaus & Co analyst Richard Jaffe said in a client note.
Abercrombie underscored the changing times by saying it would sell its private jet. However, it said the strong dollar would offset the benefits of cost cuts.
The company is also expanding internationally, where it gets about a third of its revenue.
A&F opened 15 stores outside the United States during the year and plans to open the same number this year.
Abercrombie closed 52 U.S. stores last year and plans to close 60 more in 2015. As of Jan. 31, it had 799 stores in the United States and 170 outside the country.
A&F’s same-store sales fell 10 percent in the fourth quarter, while net sales slid 14 percent to $1.12 billion, falling short of the average analyst estimate of $1.17 billion, according to Thomson Reuters I/B/E/S.
Excluding items, the company earned $1.15 per share, matching market expectations.
Reporting by Ramkumar Iyer in Bangalore; Editing by Joyjeet Das