Abercrombie & Fitch scores well with investors, despite a 3 % drop in sales. The brand made famous by its shirtless men performed better than expected – despite the decline – and seems to be on the right track again.
Better holidays in sight
A 3 % drop in sales to 880 million dollars (at current rates, roughly the same amount in euros) and yet the mood at Abercrombie & Fitch is cheerful. The American fashion group, which marked the 2000s with bare male bodies and nightclub-style shops, sees sales trends improving. “Sales may be down 3 % from last year, but if you adjust for currency fluctuations, sales were flat”, CEO Fran Horowitz explains.
The flagship Abercrombie brand even recorded a 10 % increase in sales, while the younger, more affordable brand Hollister was responsible for the decline with a 12 % drop in sales. For the year as a whole, Abercrombie & Fitch now expects sales to fall by 2 to 3 %, rather than the 5 % drop the group had previously forecast.
Unlike last year, the company says it now has sufficient inventory to get through the end-of-year period. Luckily, as holiday season sales are starting to pick up, according to Horowitz. However, the company still has a net loss of 35.5 million dollars, compared to a profit of 197.5 million dollars a year earlier. In the third quarter alone, operating profit fell from 72.7 million dollars last year to 17.5 million dollars today, due to higher costs.