NEW ALBANY, Ohio – Abercrombie & Fitch Co. on Thursday reported second-quarter sales that fell short of Wall Street estimates, hurt by its Hollister division selling out of its summer clothing too soon in an unusually hot summer in Europe.
Shares in the company based in New Albany, Ohio, fell 17 percent, even as the teen retailer's adjusted profit beat expectations.
Abercrombie & Fitch and other teen retailers are reinventing themselves in the face of changing customer behavior. Teens are spending more online, and they're also increasingly shopping at fast-fashion chains like Forever 21.
A&F, which had long been the destination for teens, struggled during the Great Recession and has had to rework its clothing and get rid of ads featuring topless male models as it pursues an image that's more inclusive.
On Wednesday, rival American Eagle Outfitters reported better-than expected second-quarter profit and sales. But its shares fell more than 3 percent on a disappointing outlook.
"Investors will not be willing to give (Abercrombie) a pass on weather," noted Janine Stichter, an analyst at Jefferies, in a note published Thursday. She added that Wall Street wants to see sales reaccelerate to show that the issues are temporary at the company's international business, which accounts for 40 percent of total sales.
A&F reported a loss of $3.9 million, or a loss of 6 cents per share, for the quarter ended Aug. 4. That compares with a loss of $15.5 million, or 23 cents per share, in the year-ago period.
Earnings, adjusted for non-recurring costs, came to 6 cents per share.
The average estimate of nine analysts surveyed by Zacks Investment Research was for a loss of 5 cents per share.
The teen clothing retailer posted revenue of $842.4 million in the period, which missed Street forecasts. Seven analysts surveyed by Zacks expected $847.1 million.
Sales at stores opened at least a year rose 3 percent, with Hollister up 4 percent and Abercrombie & Fitch up 2 percent. Analysts were expecting 3.7 percent for the overall company, 2.4 percent for the namesake chain and 5.3 percent for the Hollister brand.
The chain said that its overall same-store sales should be in the range of 2 to 4 percent for the year.
It stock fell $4.67 to close Thursday at $22.55.
Elements of this story were generated by Automated Insights using data from Zacks Investment Research. Access a Zacks stock report on ANF at https://www.zacks.com/ap/ANF