Abercrombie 1Q results disappoint, cuts outlook

Abercrombie & Fitch, already under fire, cuts outlook and shares tumble

Associated Press

NEW YORK (AP) -- Abercrombie & Fitch became the latest retailer to release a disappointing outlook and shares tumbled 10 percent in early trading Friday after the company posted first-quarter earnings.

The company has already had a rough week as it fights off the backlash from comments made by CEO Mike Jefferies seven years ago during an interview with Salon.com, which are just now going viral.

The retailer said it now anticipates full-year earnings in a range of $3.15 to $3.25 per share. Its prior guidance was for earnings between $3.35 and $3.45 per share. For the second quarter, it foresees earnings of 28 cents to 33 cents per share.

The original outlook for 2013 had already been below Wall Street predictions of $3.50 per share.

For the period ended May 4, Abercrombie & Fitch Co. lost $7.2 million, or 9 cents per share. That's a bigger loss than the 5 cents Wall Street had expected, though smaller than last year's loss of $21.3 million, or 25 cents per share.

Revenue was well short of expectations, falling 9 percent to $838.8 million from $921.2 million. Analysts had expected something closer to $938 million.

The comments made by Jefferies, in which he said Abercrombie wants to sell only to attractive kids and that some people don't belong in the Abercrombie clothes, have led to letter-writing campaigns and boycotts over the past week.

The comments are getting new attention because of a book on retailers and interviews with its co-author, Robin Lewis, in which he discusses Jefferies.

Jefferies comments have gone viral in a way that they would not have seven years ago, during the original interview. At the same time anti-bullying campaigns have also become more energized after a spate of teen suicides grabbed headlines.

On May 15 Jefferies said on Facebook that his comments were taken out of context. While he said that he regretted that his words were found offensive, he said that the company does target "a particular segment of customers."

On Wednesday Abercrombie released a statement insisting that it is committed to anti-bullying and supportive of diversity and inclusion. The Columbus, Ohio, company said it regretted and wanted to apologize for "any offense caused by comments we have made in the past which are contrary to these values."

Shares of Abercrombie & Fitch fell $5.47 to $48.90 before the market open.

U.S. sales at Abercrombie fell 17 percent during the most recent quarter to $534.9 million, including direct-to-consumer sales. Internationally, sales rose 10 percent to $303.9 million, with direct-to-consumer sales included.

Revenue at stores open at least a year, including direct-to-consumer results, dropped 15 percent. In the U.S., that figure declined 14 percent. It fell 16 percent overseas.

Within its brands, the biggest decline came from Hollister Co. — down 18 percent. The company's namesake brand posted a 13 percent drop, while Abercrombie kids stores had a 5 percent decline.

The company declared a quarterly dividend of 20 cents per share, which will be paid on June 18 to shareholders of record on June 3.

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