Abercrombie & Fitch reveals tariff impact, expects gross profit rate to fall

Net sales at Abercrombie & Fitch Co. for the second quarter ended August 3, 2019, decreased 0.2 percent to 841.1 million dollars, and increased 1 percent on a constant currency basis as compared to last year. Comparable sales were flat against positive comparable sales of 3 percent last year. Gross profit rate of 59.3 percent was down 90 basis points to last year. The company reported net loss per diluted share was 48 cents compared to last year GAAP net loss per diluted share of 6 cents and adjusted non-GAAP net income per diluted share of 6 cents and adjusted non-GAAP net income per diluted share of 1 cent on a constant currency basis.

Commenting on the second quarter trading, Fran Horowitz, the company’s Chief Executive Officer, said in a statement: “Trends improved throughout the second quarter, enabling us to deliver constant currency revenue growth. In the second quarter, we delivered 26 new store experiences, closed our Hollister SoHo flagship store in NYC and realized double digit digital sales growth.”

Abercrombie & Fitch cuts sales outlook for full year

For fiscal 2019, the company expects net sales to be in the range of flat to up 2 percent, driven by comparable sales and net new store contribution, partially offset by an adverse impact from changes in foreign currency exchange rates of approximately 45 million dollars of which approximately 26 million dollars has been reflected in year-to-date results, comparable sales to be in the range of flat to up 2 percent, against positive comparable sales of 3 percent last year, gross profit rate to be down in the range of 50 to 90 basis points from the fiscal 2018 rate of 60.2 percent, reflecting a combined adverse impact from changes in foreign currency exchange rates and anticipated China tariffs of approximately 60 basis points.

For the third quarter, the company expects net sales to be up approximately 1 percent, reflecting an adverse impact from changes in foreign currency exchange rates of approximately 10 million dollars, comparable sales to be approximately flat, against positive comparable sales of 3 percent last year, gross profit rate to be down approximately 100 basis points as compared to fiscal 2018 rate of 61.3 percent, reflecting a combined adverse impact from changes in foreign currency exchange rates and anticipated China tariffs of approximately 90 basis points.

On August 22, 2019 the company’s board declared a quarterly cash dividend of 20 cents per share on the Class A Common Stock of Abercrombie & Fitch Co., payable on September 16, 2019 to stockholders of record at the close of business on September 6, 2019.

Picture:Abercrombie & Fitch media centre

 

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