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A&F feels the pain: weak Q2 weak and Q3 forecast

By FashionUnited

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Fashion

ANALYSIS_ Abercrombie and Fitch has announced that its sales fell by ten percent during the second quarter of the year. This compares to the 2.5 percent drop expected by analysts. On the back of the news, the stock tripped on Thursday

to levels not seen in nine months.

Abercrombie & Fitch has reported that revenue fell 1 percent during this quarter, a 5 percent miss relative to the average Wall Street estimate. Sales fell 8 percent in the US, widening the gap with international markets, where sales grew 15 percent and direct sales rose 21 percent.

Mike
Jeffries, chief executive and chairman of the company, explained that the second quarter had proved to be more difficult than the firm had expected. Analysts had predicted a 2.5 percent drop in sales for the clothing brand.

On a comparable sales (comps) basis, overall comps plunged 10 percent, mirroring last year’s second-quarter dip. US comps were down 11 percent, and even if the international comps saw a milder decline of 7 percent, it is still something that should concern the retailer, according to the analysts that follow the stock.

Rahul Sharma, of retail consultants Neev Capital, said: "The taste of the teen market is fickle, and so this is always a difficult space for retailers, but at the heart of it, it's a problem with the offering," as quoted by ‘City Index’.


Abercrombie & Fitch lowers Q3 forecast on the back of weak Q2

Shares in the firm lost more than 17 percent of their value on Thursday August 22nd due to the gloom forecast, reported BBC News. On the back of disappointing earnings combined and a weak outlook, the stock dove to its lowest in nine months.

Abercrombie & Fitch (NYSE:ANF) plunged 18 percent to close at 38.53 dollars a share in Wall Street, the lowest since November.

The teen-apparel retailer forecast current-quarter earnings per share that amounted to less than half what analysts’ expected. The outlook is the second-worst of any major company, according to FactSet data.

Commenting the worst-than-expected results for Reuters, Bryan Keane, portfolio manager of the Alpine Global Consumer Growth Fund said: "The teen retailers seem to be not in style or in vogue at this point in time for their target consumers". "That usually does not turn around quickly," he added.




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