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Abercrombie & Fitch reports fall in GAAP net income

By Prachi Singh

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Management

Abercrombie & Fitch said that the GAAP net income per diluted share was 0.71 dollar for the fourth quarter ended January 28, 2017, compared to 0.85 for the fourth quarter last year. GAAP net income per diluted share was 0.06 dollar for the full year, compared to 0.51 dollar for the full year last year. Excluding certain items, the company reported adjusted non-GAAP net loss per diluted share of 0.06 dollar for the full year, compared to adjusted non-GAAP net income per diluted share of 1.12 dollar for the full year last year.

Commenting on the company’s results, Fran Horowitz, Chief Executive Officer, said in a press release, "Results for the quarter reflect a still challenging and competitive retail environment, however we continue to make progress on our strategic priorities. While overall results did not meet expectations, 2016 was a year of significant progress on each of our strategic priorities. We continued to proactively respond to the evolving retail landscape through our store closure and channel optimization initiatives."

Fourth quarter and full year results

Net sales for the fourth quarter of 1.036 billion dollars were down 7 percent from last year, with comparable sales for the fourth quarter down 5 percent. By brand, net sales decreased 13 percent to 442.4 million dollars for Abercrombie and decreased 2 percent to 594 million dollars for Hollister from last year.

By geography, net sales decreased 8 percent to 688.2 million dollars in the US and decreased 5 percent to 348.2 million dollars in international markets from last year. Direct-to-consumer and omni-channel sales grew to approximately 31 percent of total company net sales for the fourth quarter, compared to approximately 28 percent of total company net sales last year.

Net sales for the full year of 3.327 billion dollars were down 5 percent from last year, with comparable sales for the full year down 5 percent. By brand, net sales decreased 9 percent to 1.487 billion dollars for Abercrombie and decreased 2 percent to 1.840 billion dollars for Hollister from last year.

By geography, net sales for the full year decreased 7 percent to 2.124 billion dollars in the US and decreased 3 percent to 1.203 billion dollars in international markets from last year. Direct-to-consumer and omni-channel sales grew to approximately 26 percent of total company net sales for the full year, compared to approximately 24percent of total company net sales last year.

During the year, the company opened 20 new stores, including 10 international and four US full-price stores and six outlet stores, primarily in the US. The company also closed 54 stores, primarily in the US.

On February 15, 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.

The company expects improvement in FY17 results

For fiscal 2017, the company expects, comparable sales to improve for the full year, but to remain challenging for the first half, with Hollister, its largest brand, expected to maintain or improve its comparable sales trend and Abercrombie to improve throughout the year. Adverse effects from foreign currency on sales and operating income is expected to be approximately 55 million dollars and 25 million dollars, respectively, or approximately 0.25 dollar per diluted share.

The company plans to open six full-price stores in fiscal 2017, including four in the US and two in international markets and two new outlet stores. In addition, the company anticipates closing approximately 60 stores in the US during the fiscal year through natural lease expirations.

Summing up

FY16 turnover down 3.327 bn dollars
Q4 revenues dip 1.036 bn dollars

Picture:Facebook/Abercrombie & Fitch

Abercrombie & Fitch