Abercrombie & Fitch (ANF) Tops Q1 EPS by 21c, Comps Increase 5%, Offers Outlook

June 1, 2018 7:31 AM EDT

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Abercrombie & Fitch (NYSE: ANF) reported Q1 EPS of ($0.56), $0.21 better than the analyst estimate of ($0.77). Revenue for the quarter came in at $730.9 million versus the consensus estimate of $696.65 million.

Comparable sales increased 5%, with Hollister up 6% and Abercrombie up 3%

Outlook

For fiscal 2018, the company now expects:

• Comparable sales to be up in the range of 2% to 4%

• Net sales to be up in the range of 2% to 4%, with net sales in the second quarter to be up high-single digits, including benefits from changes in foreign currency exchange rates and the calendar shift

Changes in foreign currency exchange rates to benefit net sales by approximately $50 million, including approximately $25 million in the first quarter, and operating income by approximately $15 million

The calendar shift and the loss of fiscal 2017's 53rd week to adversely impact net sales by approximately $40 million, with benefits to first quarter and second quarter net sales of approximately $10 million and $30 million, respectively, to be more than offset by adverse impacts to third quarter and fourth quarter net sales of approximately $20 million and $60 million, respectively

• A gross profit rate up slightly from the fiscal 2017 rate of 59.7%

• GAAP operating expense, including certain legal charges of $5.6 million, lease termination charges of $3.9 million and volume-related expenses from higher sales, to be up approximately 2% from fiscal 2017 adjusted operating expense of $2 billion. For the second quarter, operating expense are expected to be up mid-single digits from fiscal 2017 adjusted operating expense of $479 million

• A weighted average fully-diluted share count of approximately 70 million shares, excluding the effect of potential share buybacks

For fiscal 2018, the company expects the full year effective tax rate to be in the mid-30s, including discrete non-cash income tax charges of approximately $9 million related to share-based compensation accounting standards that went into effect in fiscal 2017, of which approximately $8 million was recognized during the first quarter. For the remainder of the year, the company expects the effective tax rate to be in the mid-to-upper 20s.

The company is now targeting capital expenditures to be in the range of $135 million to $140 million for fiscal 2018. Capital expenditures are expected to include approximately $85 million for store updates and new stores and between $50 million to $55 million for direct-to-consumer and omnichannel investments, information technology and other projects.

The company plans to open 22 full-price stores in fiscal 2018, including 13 Hollister and nine Abercrombie stores. In addition, the company anticipates closing up to 60 stores in the U.S. during the fiscal year through natural lease expirations.

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



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