- Prachi Singh |
Abercrombie & Fitch’s GAAP net income per diluted share was 0.15 dollar for the third quarter ended October 28, 2017, compared to 0.12 dollar for the third quarter last year. Excluding certain items, the company reported adjusted non-GAAP net income per diluted share of 0.30 dollar for the quarter, compared to 0.02 dollar last year. Net sales were 859.1 million dollars, up 5 percent over last year, with comparable sales for the third quarter up 4 percent and changes in foreign currency exchange rates benefiting net sales by 1 percent.
Commenting on the results, Fran Horowitz, the company’s CEO said in a press release: "We are pleased by the clear progress across all brands, delivering another quarter of sequential comparable sales improvement, and a return to positive comparable sales. This sales performance in combination with disciplined expense management drove profit growth, despite the promotional environment.”
Review of the third quarter sales results
By brand, net sales for the third quarter increased 10 percent to 508.1 million dollars for Hollister and decreased 2 percent to 351 million dollars for Abercrombie over last year. By geography, net sales increased 4 percent to 554.7 million dollars in the US and 5 percent to 304.4 million dollars in international markets over last year.
Direct-to-consumer sales grew to approximately 24 percent of total company net sales for the third quarter, compared to approximately 23 percent of total company net sales last year.
The gross profit rate for the third quarter was 61.3 percent, 80 basis points lower than last year on a constant currency basis, as lower average unit cost was more than offset by lower average unit retail. Net other operating income was 0.1 million dollars compared to 0.8 million dollars last year. Operating income was 22.7 million dollars compared to 19.6 million dollars last year. Excluding certain items, adjusted non-GAAP operating income was 37.3 million dollars compared to 13.6 million dollars last year.
Net income attributable to Abercrombie & Fitch Co. was 10.1 million dollars compared to 7.9 million dollars last year. Excluding certain items, adjusted non-GAAP net income attributable to Abercrombie & Fitch Co. for the third quarter was 20.5 million dollars compared to 1.4 million dollars last year.
On November 14, 2017, the board of directors declared a quarterly cash dividend of 0.20 dollar per share on the Class A Common Stock of Abercrombie & Fitch Co., payable on December 11, 2017 to stockholders of record at the close of business on December 1, 2017.
Abercrombie & Fitch reveals Q4 outlook
For the fourth quarter of fiscal 2017, the company expects, comparable sales to be up low-single digits, and net sales to be up mid- to high-single digits, including benefits from the 53rd week and changes in foreign currency exchange rates. The 53rd week is expected to benefit net sales by approximately 38 million dollars and operating income by approximately 2 million dollars.
Changes in foreign currency exchange rates is expected to benefit net sales by approximately 20 million dollars and operating income by approximately 5 million dollars, net of hedging. A gross profit rate is anticipated to be down approximately 100 basis points to last year's rate of 59.3 percent, in line with the third quarter year-over-year decline.
The company said, in addition to the five stores opened year to date, including two outlet stores, the company expects to open four new full-price stores in the fourth quarter. The company anticipates closing up to 60 stores in the US by year-end through natural lease expirations, including 14 stores closed to date.