ABERCROMBIE & FITCH STOCK PLUNGES AFTER NEGATIVE FIRST QUARTER RESULTS

The stock of Ohio-based retailer Abercrombie & Fitch Co. plunged nearly 17 percent by noon on Thursday after the company reported a GAAP net loss per diluted share of $0.59 for the first quarter ended April 30, 2016, compared to a GAAP net loss per diluted share of $0.91.

Net sales for the first quarter of $685.5 million were down 3 percent over last year, with comparable sales for the first quarter down 4 percent. By brand, net sales for the first quarter decreased 5 percent to $323.3 million for Abercrombie and decreased 2 percent to $362.1 million for Hollister over last year.

“Our results for the quarter reflect significant traffic headwinds, particularly in international markets and in our U.S. flagship and tourist stores, resulting in negative comparable sales,” said executive chairman Arthur Martinez. “However, in the face of these headwinds, we were encouraged by our U.S. business, where comparable sales improved in the Hollister brand, and gross margin rate increased meaningfully for both brands. Overall, our business remains well managed in these challenging times, with our assortment and customer-centricity efforts driving improved conversion, and expense and inventory well controlled.”

Martinez noted that results would be similar for the second quarter, but predicted stronger sales in the second half of the year. “We expect the second quarter to remain challenging, but to see better results in the back half of the year as our assortments continue to improve and we see returns from significant investments in marketing, store management and omnichannel,” said Martinez. “In addition, with the new brand presidents and other key roles now filled, we have a strong team in place to drive our brands forward and capitalize on the many opportunities we see ahead of us.”

The company also announced that it plans to open approximately 15 new stores in fiscal 2016, including approximately 10 in international markets, primarily China, and approximately five in the U.S. It also plans to open six new outlet stores, primarily in the U.S. Conversely, the company anticipates closing up to 60 stores in the U.S. during the fiscal year through natural lease expirations.