A&F stock down 12% after weal preliminary earnings

Abercrombie & Fitch’s stock price plummeted Thursday over 12% after it released preliminary fourth quarter earnings weaker than expected at Wall Street. The retailer also expects margins to decline. The company will provide additional details on

2012 expectations on February 15.
 
"Our sales for the quarter were below expectations in a highly promotional environment, and our results were further affected by all-time high cotton costs," chief executive Mike Jeffries said in a statement.
 
On Thursday Abercrombie & Fitch released preliminary adjusted earnings of $1.10 to $1.15 per share for the quarter, missing by far analyst expectations of $1.57 per share, reported Bloomberg. The company said net sales are anticipated to increase 16 percent to $1.32 billion, compared to last year’s revenue of $1.14 billion.
 
"We remain cautious on near-term sales trends; however, we are confident that we are on track with our assortment and our long-term strategy, and hope to see improvement as 2012 progresses."
 
Looking ahead, the company now projects full-year earnings per share in the range of $3.50 to $3.75. This estimate is based on an assumption of flat same-store sales.  Analysts were looking for full-year earnings of $4.21 per share.
 
Comparable store sales for the quarter were flat from a year-earlier, and below expectations due to weaker U.S. performance than the company anticipated. Meanwhile, same-store sales are considered a key measure to gauge a retailer’s financial health because it excludes sales from stores that recently opened or closed during the year.
 
Total company direct-to-consumer sales, including shipping and handling, are seen to jump 41 percent to $212.3 million, it said. For the quarter, gross margin erosion is now expected to be 750 basis points due to lower than expected sales and higher markdowns driven by an aggressive promotional environment.
 
Shares fell 12.04% to $41.19 each Thursday afternoon. Piper Jaffray (NYSE: PJC) cut their price target on shares of Abercrombie & Fitch (NYSE: ANF) to $54.00 in a research note issued on Thursday.
 
Separately, analysts at Zacks Investment Research reiterated a “neutral” rating on shares of Abercrombie & Fitch in a research note to investors on Friday, January 27th. They now have a $48.00 price target on the stock.
 
The company has a market cap of $3.554 billion.