Abercrombie & Fitch (ANF) Misses Q4 EPS by 2c; Comps Fell 10%; Provides FY15 Outlook

March 4, 2015 7:36 AM EST

Abercrombie & Fitch (NYSE: ANF) reported Q4 EPS of $1.15, $0.02 worse than the analyst estimate of $1.17. Revenue for the quarter came in at $1.12 billion versus the consensus estimate of $1.17 billion.

Comps fell 10 percent. Store comps were down 13 percent, while direct-to-customer comps rose 1 percent.


The Company is providing the following outlook on elements of its performance for fiscal 2015. As the Company gets greater visibility to the timing and impact of its on-going strategic initiatives, it expects to resume providing comparable sales and earnings per share guidance.

The Company expects a significant headwind from foreign currency exchange rates in fiscal 2015. Recasting adjusted fiscal 2014 results using current exchange rates would have reduced sales by approximately $135 million and operating income, net of hedging, by approximately $60 million.

With regard to comparable sales, the Company expects the negative impact from reduced logo sales to modestly abate in the first half of the fiscal year and neutralize in the second half of the fiscal year.

The Company expects gross margin rate to be flat to slightly up for fiscal 2015, driven by average unit cost reductions, offset by the adverse effect from foreign currency exchange rates.

With regard to operating expense, the Company expects the benefit from the effects of foreign currency exchange rates, and savings from the profit improvement initiative, to be offset by the restoration of normal incentive compensation accruals, and increased investment in direct-to-consumer and omni-channel.

The Company anticipates the full year tax rate to be in the mid 40s, which reflects erosion in European earnings, including the effect of changes in foreign currency exchange rates.

Excluding the effect of potential share buybacks, the Company is projecting a weighted average share count of approximately 70 million shares.

Excluded from the Company's full year outlook are potential impairment and store closing charges and other potential charges related to its business transformation and restructuring efforts.

The Company plans to open 15 full-price stores in fiscal 2015 in the key growth markets of China, Japan and the Middle East and four full price stores in North America. The Company also plans to open 11 new outlet stores in the U.S. In addition, the Company anticipates closing approximately 60 stores in the U.S. during the fiscal year through natural lease expirations.

The Company is targeting capital expenditures of approximately $150 million for the fiscal year, which are prioritized toward new stores and store updates, as well as direct-to-consumer and IT investments to support growth initiatives.

For earnings history and earnings-related data on Abercrombie & Fitch (ANF) click here.

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