Abercrombie & Fitch (ANF) Posts Q2 adj.-EPS of 12c; Brand Comps Fell 8%

August 26, 2015 7:32 AM EDT

Abercrombie & Fitch (NYSE: ANF) reported Q2 adjusted EPS of $0.12, $0.16 better than the analyst estimate of ($0.04). Revenue for the quarter came in at $817.8 million versus the consensus estimate of $812.03 million.

Sequential improvements in comparable sales trends were driven largely by Hollister and abercrombie kids and internationally. The Company achieved positive comparable sales in Asia and Canada and broad-based sequential improvement in Europe, including in the UK, Germany and France.

Comparable Sales Summary - Brand (1)First Quarter Second Quarter Year-to-Date
Abercrombie(2)(9)% (7)% (8)%
Hollister(6)% (1)% (4)%
Total Company(8)% (4)% (6)%

Comparable Sales Summary - Geography (1)First Quarter Second Quarter Year-to-Date
United States(7)% (4)% (6)%
International(9)% (4)% (6)%
Total Company(8)% (4)% (6)%

(1) Comparable sales are calculated on a constant currency basis and exclude Gilly Hicks.
(2) Abercrombie includes the Abercrombie & Fitch and abercrombie kids brands.

Outlook

With regard to the second-half of its fiscal year 2015, the Company expects:

  • Further comparable sales trend improvement, skewed towards the fourth quarter.
  • Continued headwinds from foreign currency exchange rates based on current exchange rates.
  • Gross margin rate to be approximately flat compared to last year, but up on a constant currency basis.
  • Operating expense to be approximately flat compared to last year after absorbing the restoration of incentive compensation provisions, the effects of which will skew toward the third quarter, excluding the effects relating to changes in comparable sales.
  • A weighted average diluted share count of approximately 70 million shares, excluding effects of potential share buybacks.

In addition, the Company expects an elevated tax rate on a full year basis, which remains highly sensitive to earnings mix by jurisdiction. Over time, the sustainable tax rate is expected to return to the mid-to-upper 30's.

The Company also expects capital expenditures of approximately $150 million for the full-year. These expenditures will focus on the opening of new stores and store updates, as well as direct-to-consumer and IT investments to support growth initiatives.

The Company plans to open 15 full-price stores in fiscal 2015 in the key growth markets of China, Japan and the Middle East, six full price stores in North America and ten 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.

Excluded from the Company's outlook for the remainder of fiscal year 2015 are potential charges related to impairments and store closings and other potential charges related to its restructuring efforts.

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



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