Thursday, November 15, 2012

Abercrombie & Fitch posts higher profit, shares jump

(Reuters) - Abercrombie & Fitch Co teen clothing retailer posted a higher quarterly profit on Wednesday after improved demand in foreign markets, prompting the company to forecast yearly earnings above Wall Street's estimates.

Shares of the company, which hired Goldman Sachs Group Inc in September to help ward off pressure from investors, jumped 21 percent to $37.75 in trading before the bell. Abercrombie & Fitch closed at $31.18 on Tuesday on the New York Stock Exchange.

The retailer expects to make about $2.85-$3.00 a share for the full year. Analysts, on average, were expecting the company to earn $2.48 a share, according to Thomson Reuters I/B/E/S.

Over the past year, Abercrombie & Fitch sales fell as the chain's style lost favor in a segment dominated by so-called fast-fashion retailers.

Rivals such as Forever21 offer more-affordable clothes for more fashion seasons, while peers such as American Eagle Outfitters and Gap Inc have done a better job of turning over inventory and styles.

The company has also taken steps to stop the sales drain, from increasing sourcing from the United States and Central America to delaying expansion in troubled European markets.

Same store sales, or sales at established stores open for at least a year, fell 3 percent in the third quarter, an improvement over the 10 percent drop in the second quarter.

They are expected to drop into the mid-single digit percentage in the fourth quarter.

For the third quarter ended October 27, Abercrombie earned $71.5 million, or 87 cents a share, compared with $50.9 million, or 57 cents a share, in the same quarter last year. Analysts were expecting earnings of 59 cents a share.

Sales rose 9 percent to $1.17 billion, led by a 37 percent rise in international markets.

(Reporting by Nivedita Bhattacharjee in Chicago; Editing by Jeffrey Benkoe and Grant McCool)

Source: http://news.yahoo.com/abercrombie-posts-bigger-quarterly-profit-121828161--sector.html

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