Abercrombie & Fitch has experienced its financial woes as of late, and CEO Michael S. Jeffries is confident that the company will return to prominence.
“While we continue to operate in a challenging environment, we are pleased that we were able to exceed both our earnings expectations coming into the quarter, and prior year’s earnings, as we continued to manage expenses tightly and exceeded expectations on our profit improvement initiative,” Jeffries said during an Aug. 28 conference call to discuss second-quarter financial results.
Second-quarter sales fell 6%, to $891 million.
U.S. comparable store sales for the second quarter showed slight sequential improvement, while International comparable store sales for the second quarter sequentially declined, particularly in Europe. Direct-to-consumer comparable sales were positive in the second quarter, but by a lower percentage than in the first quarter.
Net sales by brand for the second quarter were $349.6 million for Abercrombie & Fitch; $70.9 million for abercrombie kids; and $464.6 million for Hollister Co. Comparable sales by brand, including direct-to-consumer, decreased 1% for Abercrombie & Fitch, decreased 6% for abercrombie kids, and decreased 10% for Hollister Co.
Last year, according to Trefis–which analyzes how companies’ products impact stock prices−a fickle customer base has been big reason why specialty apparel retailer Abercrombie & Fitch continues to experience fiscal and engagement woes. According to that report last year, teenage customers have shown low brand loyalty as they have been readily shifting to brands that provide relevant fashion at reasonable prices.
“Sales for the second quarter were somewhere below our plan, but we have seen modest improvement since we set back-to-school in mid-July,” Jeffries explained. “Importantly, we have been able to achieve this improvement despite adverse likes in our logo business as we work to strategically reduce that element of our assortment. We are confident that the evolution of our assortment will drive further improvements in sales as we go forward.”
Jeffries said that to complement the company’s evolving assortment, “we continue to focus on increasing brand engagement through enhanced marketing initiatives and campaigns, and are making great progress that many of you have also noticed. For back-to-school, our marketing initiatives have been focused on developing digital editorial content around our newest product and key trends. Being on track with our core merchandising and marketing initiatives is critical to our efforts to stabilize and improve productivity levels in both our U.S. and international stores and while some of these initiatives will take time to fully pay off, we remain confident we are on the right track.”
Growing the Direct-to-Consumer business is a key part of the company’s long-term strategy. The company launched a redesigned Hollister website for back-to-school, which included increased mobile optimization.
What’s more, the company plans to open a total of 14 full-price international stores throughout the year. It also plans to open eight to 10 international and U.S. outlet stores during the fiscal year. Abercrombie& Fitch also plan to close about 60 stores in the U.S. during the fiscal year through natural lease expirations.