Abercrombie & Fitch sales down 12% in third quarter
US fashion brand Abercrombie & Fitch has reported that its third quarter net sales decreased by 12% to $911.4 million.
Total comparable sales, including direct-to-consumer sales, fell by 10% with comparable US sales decreasing by 7% and comparable international sales falling by 15%. Total direct-to-consumer comparable sales rose by 8%.
The company said sales in the period were below expectations with comparable sales in September and October being significantly weaker than August. Although the international stores segment was the most difficult, the lower sales trend was broadly based.
Abercrombie & Fitch now expects modest gross margin rate erosion for the quarter compared to last year, due to a “highly promotional and challenging” environment. It said the effect of lower sales and gross margins will be partially offset by continued significant expense reductions. The results for the quarter were also adversely impacted by the strengthening of the US dollar.
Never Miss a Retail Update!The company ended the period with inventory at cost down 20% compared to the end of the third quarter in the previous year.
Abercrombie & Fitch chief executive Mike Jeffries said: “We are clearly disappointed with our results for the third quarter. Continued weak store traffic was the primary contributor to the weak sales trend, particularly in Europe, where the environment there showed signs of further slowing. In addition, the decline in sales of heavy logo product weighed on the sales trend as we continued to reduce that element of our assortment in response to changing consumer preferences.
“In the short term, we are reviewing measures to drive improvement in our results in the critical fourth quarter.
“Longer term, we continue to believe we are taking the right steps strategically to position the company for future improvements in our performance. This includes the completion of our move to a branded structure, strategic investments in Asia and in our Direct to Consumer business, shifting our assortment in line with consumer preferences, re-engaging with our customer through store re-design and marketing initiatives, continuing to close underperforming US stores, and continuing to reduce expenses.”
