Teen apparel retailer Abercrombie & Fitch reported a surprise adjusted quarterly profit as it benefits from the turnaround efforts at the Hollister brand, sending its shares up about 16 per cent.
The company had started offering trendier clothing such as floral prints and revamped its Hollister stores after customers moved away from its logo-centric apparel sold under the Abercrombie & Fitch brand.
Although the company was painfully slow to react to changing tastes, the management team is slowly getting a grip on the new realities of retailing, said research firm Conlumino’s chief executive Neil Saunders.
Comparable sales at Hollister fell 1 per cent in the second quarter. Analysts had expected a bigger 4.7 per cent decline, according to research firm Consensus Metrix.
The company said in August last year that it would shed the traditional line in North America, which was once popular among teens.
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Abercrombie, which is yet to find a permanent CEO after Mike Jeffries left in 2014, hired designers and executives from top brands such as Ralph Lauren, Karl Lagerfeld and Tommy Hilfiger last week to breathe new life into the Abercrombie & Fitch brand.
Second-quarter revenue fell 8 per cent to $817.8 million, the slowest decline in four quarters, helped by better demand for dresses and jeans. Analysts on average had expected sales of $811.5 million, according to Thomson Reuters I/B/E/S.
Net loss attributable to the company was $810,000, or one cent per share, in the second quarter, compared with a net profit of $12.9 million, or 17 cents per share, a year earlier. Excluding items, the company earned 12 cents per share.
Abercrombie & Fitch’s shares were trading at $19.66 in early trading on Wednesday. Up to Tuesday’s close, the stock had fallen about 40 per cent this year. – (Reuters)
