Abercrombie & Fitch Q3 profit soars 40.5%

Improvements in both its domestic and international businesses have helped Abercrombie & Fitch Co to a 40.5% boost in third quarter profit, the mall-based retailer said.

Net income surged to $71.5 million or $0.87 per share in the three months to October 27, up from $50.9 million last year.

Net sales rose 9% to $1.17 billion from $1.08 billion, with US sales flat at $818.6 million and international sales surging 37% to $351.1 million.

Total company direct-to-consumer sales increased 20% to $158.3 million, with a 15% rise in US sales and a jump of 31% internationally.

Comparable store sales fell 3% in the quarter, with a drop of 4% for Abercrombie & Fitch, 3% for Abercrombie Kids, and 1% for Hollister Co.

Lower average unit costs contributed to a 240 basis points rise in gross profit rate to 62.5%.

“These significantly improved financial results reflect progress on several fronts over the past quarter,” said CEO Mike Jeffries.

“Our US chain store business posted healthy growth on top of a strong quarter a year ago, and we saw sequential trend improvement in our international business.”

The results are in contrast to its second quarter, when the retailer saw net profit fall 51.6% on slower sales in its international stores and the first drop in US same-store sales for three years.

It had earlier earmarked a further 180 underperforming stores to close over the next few years to improve efficiency and reduce expenses — on top of the 135 stores closed in the past two years.

And in September Abercrombie & Fitch hired investment banking firm Goldman Sachs to fend off pressure from investors.

The retailer, which operates a total of 1,067 stores, now says it expects full year earnings per share of $2.85 to $3.00, based on a mid single digit percentage drop in fourth quarter same-store sales.

For more fashion and apparel industry news, go to just-style.com

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