Abercrombie Q3 Sales Down, Sees Profit Below Estimates; Shares Tank 14%

(RTTNews) - Shares of Abercrombie & Fitch Co. (ANF) plummeted 14 percent, after the teen clothing retailer reported a 12 percent slump in its third quarter revenues, more than what analysts estimated, hurt largely by weak traffic given the highly promotional and challenging environment. The company also detailed a weak earnings outlook for third quarter.

Abercrombie's third-quarter sales decreased 12 percent to $911.4 million from $1.03 billion last year. Analysts polled by Thomson Reuters expected sales of $982.24 million, or down 4.90 percent.

Comparable sales, including direct-to-consumer sales, decreased 10 percent with comparable U.S. sales decreasing 7 percent and comparable international sales down 15 percent. Comparable sales or same-store sales is an important metric gauged by investors and analysts to check a retailer's growth.

The company expects to report adjusted earnings of $0.40 to $0.42 per share for the third quarter. Analysts estimate earnings of $0.67 per share for the the quarter. The company is scheduled to report its third quarter results on Wednesday, December 3.

New Albany, Ohio-based Abercrombie said comparable sales in September and October were significantly weaker than August. The teen-apparel retailer has been struggling with lower traffic, inventory problems and strong competition in the market.

CEO Mike Jeffries said, ""We are clearly disappointed with our results for the third quarter. Continued weak store traffic was the primary contributor to the weak sales trend, particularly in Europe, where the environment there showed signs of further slowing." Jeffries also blamed the slumping demand for its heavy logo-based clothing for the lower revenues, with change in customer preference.

Inventory cost for the quarter dropped 20 percent from a year ago.

ANF is currently trading at $30.76, down $4.62 or 13.06%, on the NYSE.