Abercrombie & Fitch: Q4 comparable sales rise, warns of coronavirus impact on H1 sales

For the fourth quarter, Abercrombie & Fitch Co. net sales of 1.18 billion dollars increased 3 percent on both a reported and constant currency basis as compared to last year, while comparable sales rose 1 percent. Full year net sales of 3.62 billion dollars increased 1 percent on a reported basis and 2 percent on a constant currency basis, while comparable sales rose 1 percent. The company’s GAAP EPS were 1.29 dollars for the fourth quarter and 60 cents for the full year, respectively, while adjusted non-GAAP EPS at constant currency were 1.31 dollars for the fourth quarter and 73 cents for the full year.

Commenting on the results, Fran Horowitz, the company’s Chief Executive Officer, said in a statement: “We finished the year on a strong note, with record Black Friday week results contributing to net sales growth and positive comparable sales for the fourth quarter, and for the third consecutive year. Over the past two years we have delivered a combined 157 new store experiences, reduced gross square footage by 6 percent, accelerated the rationalization of our flagship fleet and introduced local customer and product-facing teams in the EMEA and APAC regions.”

Abercrombie & Fitch expects impact of COVID-19 on H1 results

As a result of the recent COVID-19 outbreak, the company has temporarily closed its Shanghai regional home office and of stores in mainland China and in and around Milan, Italy as well as global travel restrictions. The company said, APAC region contributed less than 10 percent of fiscal 2019 net sales, with mainland China and China’s Hong Kong Special Administrative Region combined representing roughly half of this contribution. Total company manufacturing exposure to China was 22 percent, down from 36 percent in fiscal 2018, and is planned in the low-teens for fiscal 2020. The company has seen, and expects to continue to see, a direct impact to sales and margin from lost sales in the APAC region and in locations across Europe and North America. The company also anticipates impacts from potential disruption of product deliveries across the global supply chain.

The company currently expects the majority of the impact from COVID-19 to occur in the first half. For fiscal 2020, the company expects net sales to be flat to up 2 percent, reflecting the estimated adverse impact of COVID-19 in the range of 60 million dollars to 80 million dollars and the adverse impact of changes in foreign currency exchange rates of approximately 10 million dollars. Comparable sales are expected to be down low-single digits, reflecting the estimated adverse impact of COVID-19 of approximately 200 basis points compared to positive comparable sales of 1 percent last year, gross profit rate is estimated to be down in the range of 50 basis points to 70 basis points as compared to the fiscal 2019 rate of 59.4 percent, reflecting an estimated adverse impact from COVID-19 in the range of 50 basis points to 70 basis points and the adverse impact from changes in foreign currency exchange rates of approximately 30 basis points.

For the first quarter of fiscal 2020, the company expects net sales to be down mid-single digits, reflecting the estimated adverse impact of COVID-19 in the range of 40 million dollars to 50 million dollars and the adverse impact of changes in foreign currency exchange rates of approximately 5 million dollars and comparable sales to be down mid-single digits, reflecting the estimated adverse impact from COVID-19 of approximately 600 basis points compared to positive comparable sales of 1 percent last year and gross profit rate to be down in the range of 100 basis points to 150 basis points as compared to the fiscal 2019 rate of 60.5 percent, reflecting an estimated adverse impact from COVID-19 of approximately 100 basis points and the combined adverse impact from changes in foreign currency exchange rates and anticipated China tariffs of approximately 50 basis points.

On February 21, 2020 the company’s board of directors declared a quarterly cash dividend of 20 cents per share on the Class A Common Stock of Abercrombie & Fitch Co., payable on March 16, 2020 to stockholders of record at the close of business on March 6, 2020.

Picture:Abercrombie & Fitch media gallery

 

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