Abercrombie and Fitch (NYSE: ANF) said last Thursday its sales tanked 34% during the primary quarter. As a result of store closings during the coronavirus pandemic and individuals buying less clothing as they squatted at home. Sending the retailer’s shares down as much as 10%.
The temporary closures of its recently remodelled stores have slowed Abercrombie’s efforts to revive. As its struggling flagship clothing brand, hurt by past fashion missteps. The crisis also hampered growth at Hollister.
A wide slate of retailers, who were already struggling with online competition. It has also borne the brunt of financial pain due to the COVID-19 pandemic, with many being forced into bankruptcy.
Performance during its fiscal first quarter ended May 2
- Net sales dropped to $485.4 million from $734 million every year sooner.
- Sales at its namesake Abercrombie brand were down 30% while Hollister deals were down 36%. The organization didn’t break out same-store deals during the quarter.
- Earnings per share: An adjusted loss of $3.29
- Revenue: $485.4 million
- Its overall net loss for the period finished May 2 broadened to $244.1 million, or $3.90 per share, from $19.2 million, or 29 pennies an offer, a year sooner.
- Abercrombie & Fitch reported an adjusted loss of $3.29 per share on revenue of $485.4 million during its fiscal first quarter.
- Net loss attributable to the company widened to $244.2 million, from $19.2 million a year earlier, hit by impairments and tax-related charges.
- Q1 results reflect strong cash flow management and month-over-month acceleration in digital sales growth, partially offsetting sales declines from temporary store closures
- Net loss per diluted share of $3.90 reflects adverse tax impacts of $1.45 related to valuation allowances on deferred tax assets and other tax charges and $0.62 related to asset impairment charges
The retailer isn’t offering a second-quarter or entire year viewpoint right now. Analysts had been calling for Abercrombie to report an adjusted net loss of $1.39 per share on income of $497.3 million, in light of Refinitiv gauges. Notwithstanding, it is hard to compare announced profit with analyst estimates for Abercrombie’s first quarter, as the coronavirus pandemic keeps on hitting worldwide economies with income impacts that are hard to survey.
As Abercrombie’s stores reopen during the Covid-19 emergency, profitability is coming back to about 80% in the U.S. what’s more, 60% in Europe, Middle East and Africa district, as indicated by Horowitz.
Abercrombie finished the quarter with $704 million in cash and equivalents on hand close by. Also, the organization said it had inventories of $427 million, down 1% from a year sooner.
As of Wednesday’s market close, Abercrombie shares were down about 24.5% this year. The organization has a market cap of $803.8 million.
The only bright spot in the quarter was Abercrombie’s digital sales that rose 25% as online shoppers. People bought more loungewear, knits and joggers as well as Gilly Hicks’ new activewear while they stayed at home.
Abercrombie joins a number of mall-based retailers such as Macy’s and Victoria’s Secret-owner LBrand that are struggling during the crisis more than grocery chains and companies like Walmart that sell essentials.
Statement given by CEO Fran Horowitz:
CEO Fran Horowitz said that as of Thursday, roughly half of Abercrombie’s global store base is back open for business.
She said first-quarter digital sales globally were up about 25% year over year, and that they have accelerated further into May.
Meantime, the company said it is continuing to evaluate its real estate, as it has a “couple hundred leases” coming up for renewal annually. It says it has trimmed its gross square footage by 14% since 2015, which has included shutting some of its towering flagship locations.
“This year should be no different,” CFO Scott Lipesky told analysts. “As we have stated before, we are willing to walk away from any location, if we cannot get terms that work for us. The disruption, we have seen from the pandemic only reinforces this perspective.”
Abercrombie ended the quarter with $704 million in cash and equivalents on hand. And the company said it had inventories of $427 million, down 1% from a year earlier.
“While there is still work to be done on the inventory balances, at least it is below last year’s levels despite the significant disruptions as well,” Telsey Advisory Group analyst Dana Telsey said in a note to clients.
“While this year is a lost one across space from an earnings perspective, we do see improved underlying brand health,” she added.