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Abercrombie & Fitch: Q3 GAAP net income increases to 0.15 dollar

Abercrombie & Fitch’s GAAP net income per diluted share was 0.15 dollar for the third quarter ended October 28, 2017, compared to 0.12 dollar for the third quarter last year. Excluding certain items, the company reported adjusted non-GAAP net income per diluted share of 0.30 dollar for the quarter, compared to 0.02 dollar last year. Net sales were 859.1 million dollars, up 5 percent over last year, with comparable sales for the third quarter up 4 percent and changes in foreign currency exchange rates benefiting net sales by 1 percent.

Commenting on the results, Fran Horowitz, the company’s CEO said in a press release: "We are pleased by the clear progress across all brands, delivering another quarter of sequential comparable sales improvement, and a return to positive comparable sales. This sales performance in combination with disciplined expense management drove profit growth, despite the promotional environment.”

Review of the third quarter sales results

By brand, net sales for the third quarter increased 10 percent to 508.1 million dollars for Hollister and decreased 2 percent to 351 million dollars for Abercrombie over last year. By geography, net sales increased 4 percent to 554.7 million dollars in the US and 5 percent to 304.4 million dollars in international markets over last year.

Direct-to-consumer sales grew to approximately 24 percent of total company net sales for the third quarter, compared to approximately 23 percent of total company net sales last year.

The gross profit rate for the third quarter was 61.3 percent, 80 basis points lower than last year on a constant currency basis, as lower average unit cost was more than offset by lower average unit retail. Net other operating income was 0.1 million dollars compared to 0.8 million dollars last year. Operating income was 22.7 million dollars compared to 19.6 million dollars last year. Excluding certain items, adjusted non-GAAP operating income was 37.3 million dollars compared to 13.6 million dollars last year.

Net income attributable to Abercrombie & Fitch Co. was 10.1 million dollars compared to 7.9 million dollars last year. Excluding certain items, adjusted non-GAAP net income attributable to Abercrombie & Fitch Co. for the third quarter was 20.5 million dollars compared to 1.4 million dollars last year.

On November 14, 2017, the board of directors declared a quarterly cash dividend of 0.20 dollar per share on the Class A Common Stock of Abercrombie & Fitch Co., payable on December 11, 2017 to stockholders of record at the close of business on December 1, 2017.

Abercrombie & Fitch reveals Q4 outlook

For the fourth quarter of fiscal 2017, the company expects, comparable sales to be up low-single digits, and net sales to be up mid- to high-single digits, including benefits from the 53rd week and changes in foreign currency exchange rates. The 53rd week is expected to benefit net sales by approximately 38 million dollars and operating income by approximately 2 million dollars.

Changes in foreign currency exchange rates is expected to benefit net sales by approximately 20 million dollars and operating income by approximately 5 million dollars, net of hedging. A gross profit rate is anticipated to be down approximately 100 basis points to last year's rate of 59.3 percent, in line with the third quarter year-over-year decline.

The company said, in addition to the five stores opened year to date, including two outlet stores, the company expects to open four new full-price stores in the fourth quarter. The company anticipates closing up to 60 stores in the US by year-end through natural lease expirations, including 14 stores closed to date.

Picture:Hollister website

Calvin Klein partners with Amazon to launch exclusive holiday store

Calvin Klein and Amazon Fashion are teaming up to launch Calvin Klein X Amazon Fashion holiday retail experience, available for customers to shop now through December 31st. The company said a statement that this experience will include pop-up shops in New York City and Los Angeles, as well as an online brand store on Amazon.com/mycalvins.

”We are proud to collaborate with Amazon Fashion on this exciting retail concept,” said Cheryl Abel-Hodges, Head of Calvin Klein Underwear and President, The Underwear Group of PVH in a statement, adding, “It is our goal to deliver an immersive and content-driven shopping environment to the consumer, and we are thrilled to introduce this experience to Calvin Klein and Amazon shoppers, both online and offline, just in time for the holiday season.”

Calvin Klein partners with Amazon to launch exclusive holiday store

Calvin Klein to launch pop-ups, online store with Amazon

The company added that this first of its kind initiative between Amazon Fashion and Calvin Klein will include exclusive styles available only to Amazon customers at the pop-ups and the online brand store. The pop-ups will be located in New York City’s SoHo neighborhood and in the city of Santa Monica in Los Angeles. Each location will sell Calvin Klein underwear products, including men’s and women’s underwear and loungewear offerings, while the online brand store will offer an expanded selection of both Calvin Klein underwear and jeans.

The pop-up shops will allow the customer to make purchases by scanning a bar code in the Amazon App and having their items delivered to their home, or they can even purchase in-store. Fitting rooms will contain AmazonEcho devices, which will allow shoppers to ask Alexa various questions about the Calvin Klein product and experience, control lighting features, and play music of their choice.

“The holiday season is one of the most important shopping times for our customers, and we are delighted to team up with Calvin Klein to provide a fun, interactive experience that connects our customers to product in an engaging way,” added Michelle Rothman, Vice President at Amazon Fashion.

Calvin Klein ties up with Amazon to woo customers

The customization stations at the pop-up stores will also allow shoppers to have their purchased Calvin Klein underwear personalized with special embroidery. Content creation spaces will encourage shoppers to create their own unique, sharable social media clips. Lounge areas will connect shoppers between the bi-coastal shops via video calling on the AmazonEcho Show, allowing them to interact and share content in real time.

The company further stated that throughout the holiday season, the shops will host special events with notable personalities, including supermodel and entrepreneur Karlie Klossand comedian and author Lilly Singh.

Picture credit:Calvin Klein

Gap posts positive Q3 results, raises outlook

Gap’s third quarter diluted earnings per share were 0.58 dollar, while total company comparable sales increased 3 percent versus a 1 percent decrease last year, which the company said, excluded an estimated negative impact from the Fishkill distribution center fire of approximately 2 percentage points. Net sales for the third quarter were 3.84 billion dollars compared with 3.80 billion dollars for the third quarter of fiscal year 2016.

“Today, we are happy to report our fourth consecutive quarter of positive comps, reflecting the continued momentum in key parts of our business,” said Art Peck, President and CEO, Gap, in a media statement.

Gap Global posts positive same-store sales growth

Comparable sales at Old Navy Global: positive 4 percent versus positive 4 percent last year, excluding an estimated negative impact from the Fishkill distribution center fire of approximately 1 percentage point.

Comparable sales at Gap Global were positive 1 percent versus negative 4 percent last year, excluding an estimated negative impact from the Fishkill distribution center fire of approximately 4 percentage points, while Banana Republic Global reported negative 1 percent comparable sales rise versus negative 6 percent last year, excluding an estimated negative impact from the Fishkill distribution center fire of approximately 2 percentage points.

Gap raises FY17 earnings guidance

The company has raised its reported diluted earnings per share guidance for fiscal year 2017 to be in the range of 2.18 dollars to 2.22 dollars. Adjusted to exclude the second quarter benefit from insurance proceeds related to the Fishkill fire of about 0.10 dollar, the company now expects adjusted diluted earnings per share to be in the range of 2.08 dollars to 2.12 dollars.

The company noted that foreign currency fluctuations negatively impacted earnings per share for the third quarter by an estimated 0.02 dollars or about 3 percentage points of earnings per share growth compared with the adjusted earnings per share for the third quarter of fiscal year 2016. The company now expects comparable sales for fiscal year 2017 to be up low-single-digits.

Gap paid a dividend of 0.23 dollar per share during the third quarter and in addition, on November 9, 2017, the company announced that its board of directors authorized a fourth quarter dividend of 0.23 dollar per share.

The company ended the quarter with 3,639 store locations in 46 countries, of which 3,193 were company-operated. The company now expects to close about 30 company-operated stores, net of openings and repositions.

Picture:Facebook/Gap

Ferragamo profit falls 25 percent for nine month period

As of 30 September 2017, the Salvatore Ferragamo Group posted total revenue of 1,005 million euros (1,884 million dollars), a 0.9 percent decrease against 9M 2016. The company said revenue growth at constant exchange rates was 0.2 percent. In the third quarter, total revenue amounted to 287 million euros (338 million dollars), down 5.5 percent, due to the negative impact of currencies, while sales rose 0.5 percent at constant exchange rates.

In the nine month period, the gross profit decreased by 5.1 percent to 645 million euros (759 million dollars). The gross operating profit (EBITDA) decreased by 25.1 percent over the period, to 162 million euros (190 million dollars). Excluding the 3 million euros negative impact for the planned disposal of the subsidiary in India, the company said, EBITDA would total to 165 million euros (194 million dollars), down 23.7 percent against. 9M 2016.

Retail channel witnesses growth, wholesale declines

As of September 30, 2017, the group's retail network counted on a total of 687 points of sales, including 407 directly operated stores (DOS) and 280 third party operated stores (TPOS) in the wholesale and travel retail channel, as well as the presence in department stores and multi-brand specialty stores. In the nine months, the retail distribution channel posted consolidated revenues up by 1.2 percent or 2.9 percent at constant exchange rates in like-for-like sales.

The company said that the wholesale channel, penalized by the destocking activity, the political tensions in South Korea and the strategic rationalization in Japan, registered a decrease in revenues of 4.7 percent both at current and constant exchange rates.

Ferragamo sales rise 2.8 percent in its top market – Asia

The Asia Pacific area, the group's top market in terms of revenues, saw a sales increase of 2.8 percent or 3.5 percent at constant exchange rates, despite the soft trend in South Korea, mostly due to the significant decrease of Chinese tourists, and the ongoing negative performance in Hong Kong. On the contrary, the retail channel in China recorded a revenue growth of 8.1 percent or 15.5 percent at constant exchange rates in the first nine months of 2017.

Europe posted a decrease in revenues of 1.6 percent or 0.9 percent at constant exchange rates, with a positive performance for the retail channel and a negative trend for the wholesale business, negatively impacted by the destocking activity. North America recorded a revenue decrease of 4.3 percent or 3.3 percent at constant exchange rates, negatively impacted by the department stores sales.

The Japanese market registered a 6.7 percent or 4 percent decrease at constant exchange rates due to the strategic rationalization of the wholesale channel, while the retail stores recorded a stable performance. Revenues in the Central and South America continued to grow, registering a 3.1 percent or 6.9 percent rise at constant exchange rates, decelerating in 3Q due to the earthquake in Mexico in September.

Among the product categories, footwear posted a 1.2 percent decrease, handbags and leather accessories 0.6 percent, while fragrances saw a 3.2 percent increase.

The profit before taxes amounted to 106 million euros (124 million dollars), a decline of 32.6 percent, while the net profit for the period was 79 million euros (93 million dollars), marking a 28.3 percent decrease. The group net profit was down 26.8 percent to 82 million euros (96 million dollars).

Picture:Ferragamo website

The Children’s Place posts rise in Q3 net sales and profit

The Children’s Place reported net sales increase of 3.4 percent to 490 million dollars in the third quarter of 2017, while comparable retail sales increased 5.1 percent. Net income was 44.1 million dollars or 2.44 dollars per diluted share compared to 44.2 million dollars or 2.36 dollars per diluted share, the previous year.

Commenting on the company’s results, Jane Elfers, President and Chief Executive Officer, said in a statement: “We delivered exceptional operating results in the third quarter with comparable retail sales, gross margin, operating margin and earnings per diluted share all exceeding last year. Looking ahead, while we are only a couple of weeks into the fourth quarter, our business is strong.”

Highlights of The Children’s Place’s Q3 performance

Adjusted net income was 46.7 million dollars or 2.58 dollars per diluted share compared to 42.8 million dollars or 2.29 dollars per diluted share, in the third quarter last year.

Gross profit was 202.4 million dollars compared to 194.5 million dollars in the third quarter of 2016 and adjusted gross profit was 202.4 million dollars compared to 194.4 million dollars last year, and leveraged 30 basis points to 41.3 percent of sales. Operating income was 64.1 million dollars compared to 62.1 million dollars in the third quarter of 2016, while adjusted operating income was 68.4 million dollars or 14 percent of net sales, compared to 62.4 million dollars in the third quarter last year, leveraging 80 basis points compared to last year.

Fiscal year to date net sales up 2.8 percent

Net sales increased 2.8 percent to 1,300.3 million dollars in the first nine months and comparable retail sales increased 4.8 percent. Net income was 94.6 million dollars or 5.19 dollars per diluted share compared to 68.1 million dollars or 3.56 dollars per diluted share, the previous year. Adjusted net income was 98.3 million dollars or 5.39 dollars per diluted share compared to 68.4 million dollars or 3.57 dollars per diluted share.

Gross profit was 501.4 million dollars compared to 483.7 million dollars last year. Adjusted gross profit was 502.1 million dollars or 38.6 percent of net sales, leveraging 40 basis points compared to last year. Operating income was 109.7 million dollars compared to 98.8 million dollars in fiscal 2016, while adjusted operating income was 121.9 million dollars or 9.4 percent of net sales, compared to 101.7 million dollars or 8 percent of net sales last year, leveraging 140 basis points.

The company opened one store and did not close any stores during the third quarter of 2017 and ended the quarter with 1,027 stores, a decrease of 3.2 percent compared to the prior year. Since the fleet optimization initiative was announced in 2013, The Children’s Place has closed 156 stores. The Company’s international franchise partners opened 10 points of distribution and closed three in the third quarter, and the company ended the quarter with 168 international points of distribution open and operated by its seven franchise partners in 19 countries.

The Children’s Place updates FY17 outlook

The company said that it is updating its outlook for fiscal 2017 and now expects adjusted net income per diluted share to be in the range of 7.46 to 7.51 dollars, inclusive of a 0.91 dollar benefit resulting from new accounting rules for the income tax impact on share-based compensation.

This compares to the company’s previous guidance for adjusted net income per diluted share of 7.23 dollars to 7.33 dollars, inclusive of 0.89 dollar benefit resulting from new accounting rules for the income tax impact on share-based compensation. Excluding the benefit from the new accounting rules, full year adjusted net income per diluted share guidance is projected to increase 20 percent to 21 percent compared to adjusted net income per diluted share of 5.43 dollars last year.

The company expects adjusted net income per diluted share in the fourth quarter will be between 2.07 and 2.12 dollars. This compares to adjusted net income per diluted share of 1.88 dollars in the fourth quarter of 2016. This guidance assumes a low single digit increase in comparable retail sales.

The company’s board of directors authorized a quarterly dividend of 0.40 dollar per share.

Picture:The Children's Place website

Wal-Mart continues to get the industry talking: adds Lord & Taylor to its fashion portfolio

ANALYSISContinuing with its strategic plan to compete head-to-head with Amazon for the title of online fashion mogul, Wal-Mart has announced a new partnership with Lord & Taylor. The retailer will add the U.S. fashion retailer’s clothing brands to its e-commerce platform.

“Our goal is to create a premium fashion destination on Walmart.com,” said Denise Incandela, Head of Fashion, Walmart U.S. e-commerce. “We see customers on our site searching for higher-end items, and we are expanding our business online to focus on adding specialized and premium shopping experiences, starting with fashion.”

“Our goal is to create a premium fashion destination on Walmart.com”

Commenting on the deal, Liz Rodbell, President of Lord & Taylor, highlighted that “As retail continues to change, this flagship store creates enormous growth opportunities for Lord & Taylor and our brand partners.” “Our customers trust us to deliver high-quality fashion apparel and accessories, and we will soon be able to extend the reach of that offering to new customers through this flagship store.”

“Walmart.com is a shopping destination that reaches a wide base of customers looking for premium fashion brands,” Rodbell continues. “They are a great company for us to work with as we continue to grow our digital presence.”

It’s worth recalling how aggressively Wal-Mart has been bidding on its fashion offering. The U.S. retail giant has , Modcloth, Shoebuy and Moosejaw over the past year.

Lord & Taylor’s shop on Wal-Mart will launch on Walmart.com in spring 2018. The ‘wall Street Journal’ reported in October that Lord & Taylor would own the inventory and fulfill orders from the new website.

Wal-Mart is set to report third-quarter earnings before the bell on Thursday.

Differential Brands Group Q3 net sales up 3 percent

Differential Brands Group said total company net sales for the three months ended September 30, 2017, increased 3 percent to 42.4 million dollars, reflecting a 1 percent increase in wholesale segment sales and a 5 percent increase in consumer direct segment sales. Adjusted EBITDA for the quarter was 3.2 million dollars compared to 1.8 million dollars in the same quarter last year. As a result of Hurricanes Harvey and Irma, the company said, adjusted EBITDA was negatively impacted by approximately 500,000 dollars.

Commenting on the third quarter trading, Michael Buckley, the company’s Chief Executive Officer, said in a statement: “During the third quarter, we continued to grow sales and expand gross margin, resulting in an adjusted EBITDA improvement of 1.4 million dollars. Overall, we continue to navigate the sales distribution shift in our industry from traditional brick and mortar channels, especially at department stores, to ecommerce driven sales on both our brands’ sites and our partners’ sites, and to new and innovative digital marketplaces around the globe.”

Wholesale segment sales boosted by 40 percent growth at Swims

The company said, wholesale increase was driven by over 40 percent growth at Swims, as well as by modest growth from the Hudson brand, primarily at full price specialty doors. The increase in the consumer direct segment was led by ecommerce sales growth of 12 percent. In addition, comparable store sales in the Robert Graham business grew 3 percent, driven by full price stores. The company added that comparable consumer direct growth was driven primarily by improvements in conversion rates and units per transaction across the brands.

As a result of Hurricanes Harvey and Irma, which severely impacted the Texas and Florida markets during August and September of this year, Differential Brands Group said, Robert Graham store sales were negatively impacted by approximately 300,000 dollars. The hurricanes also negatively impacted the company’s wholesale business due to cancellations of approximately 450,000 dollars across brands and inbound inventory receipt delays of 400,000 dollars, which were shipped into the subsequent quarter.

Gross profit was 18.1 million dollars compared to 15.7 million dollars in the third quarter of fiscal 2016 due to the operation of Swims, which was non-comparable for 18 days of the quarter in 2017 and added 2.5 million dollars of margin improvement versus the same quarter last year. Total company gross margin was 42.6 percent compared to 38.1 percent in the third quarter of 2016. Operating income was 1.2 million dollars compared to an operating loss of 2.4 million dollars for the same period last year.

Review of the nine month financial results

Total company net sales for the nine months ended September 30, 2017, increased 11 percent, reflecting an 11 percent increase in wholesale segment sales and a 10 percent increase in consumer direct segment sales.

Gross profit was 52.9 million for the period compared to 44.5 million dollars for the same period last year. Total company gross margin was 44.5 percent compared to 41.5 percent for the nine months ended September 30, 2016. Operating income was 0.7 million dollars compared to operating losses of 7.3 million dollars for the same period last year.

Picture:Swims website

TJX posts flat same-store sales growth in Q3

The TJX Companies’ net sales for the third quarter of fiscal 2018 increased 6 percent to 8.8 billion dollars and consolidated comparable store sales were flat compared to last year's 5 percent increase. Net income was 641 million dollars, while diluted earnings per share were 1 dollar, a 20 percent increase over the prior year's GAAP EPS of 0.83 dollar and a 10 percent increase over the prior year's adjusted EPS of 0.91 dollar.

Commenting on the company’s results, Ernie Herrman, Chief Executive Officer and President of The TJX Companies, said in a media release: "Certainly, the hurricanes had a negative impact during the quarter. Additionally, we believe that warmer temperatures in the US during the quarter dampened demand for apparel at our Marmaxx division. While sales were not as strong as we would have liked, we were pleased that sales trends at Marmaxx improved as the weather turned more seasonable."

Third quarter and nine months result highlights

For the third quarter, the company said, the movement in foreign currency exchange rates had a one percentage point positive impact on consolidated net sales growth. The overall net impact of foreign currency exchange rates had a 0.04 dollar positive impact on earnings per share, compared with a neutral impact last year.

For the third quarter, the company's consolidated pretax profit margin was 11.6 percent, a 0.9 percentage point increase compared with the prior year's 10.7 percent margin and down 0.1 percentage point compared with the prior year's adjusted 11.7 percent margin. Gross profit margin for the quarter was 29.8 percent, up 0.3 percentage points versus the prior year.

During the third quarter, the company increased its store count by 139 stores to a total of 4,052 stores.

For the first nine months, net sales were 24.9 billion dollars, a 5 percent increase over last year's 8 percent increase. Consolidated comparable store sales increased 1 percent over last year's 5 percent increase. Net income was 1.7 billion dollars and diluted EPS were 2.67 dollars, a 10 percent increase over the prior year's GAAP EPS of 2.43 dollars and a 6 percent increase over the prior year's adjusted EPS of 2.51 dollars.

For the first nine months, the movement in foreign currency exchange rates had a neutral impact on consolidated net sales growth. The overall net impact of foreign currency exchange rates had a 0.01 dollar positive impact on earnings per share in the first nine months of Fiscal 2018, compared with a 0.01 negative impact last year.

TJX expects Q4 earnings growth between 21 to 23 percent

For the fourth quarter, the company expects diluted earnings per share to be in the range of 1.25 dollars to 1.27 dollars, a 21 percent to 23 percent increase over the prior year's EPS of 1.03 dollars. Excluding an approximate 0.11 dollar benefit from the extra week in the fourth quarter, the company expects adjusted earnings per share to be in the range of 1.14 to 1.16 dollars, an 11 percent to 13 percent increase over the prior year. This EPS outlook, the company said, is based upon estimated consolidated comparable store sales growth of 1 percent to 2 percent.

For the 53-week fiscal year ending February 3, 2018, the company is maintaining the high end of its earnings per share guidance. The company expects diluted earnings per share in the range of 3.91 dollars to 3.93 dollars, a 13 percent to 14 percent increase over the prior year's EPS of 3.46 dollars. The Company's full-year guidance includes an expected benefit of approximately 0.11 dollar per share from the 53rd week in the company's fiscal 2018 calendar. Excluding this benefit, the company expects adjusted diluted earnings per share to be in the range of 3.80 dollars to 3.82 dollars, an 8 percent increase over the prior year's adjusted EPS of 3.53 dollars. This EPS outlook, the company added, is based upon estimated consolidated comparable store sales growth of 1 percent to 2 percent.

Picture:Facebook/T J Maxx