Earnings Highlights and Review: Abercrombie Outperformed Top- and Bottom-line Expectations
Research Desk Line-up: Duluth Holdings Post Earnings Coverage
LONDON, UK / ACCESSWIRE / June 20, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Abercrombie & Fitch Co. (NYSE: ANF), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=ANF, following the Company's disclosure of its first quarter fiscal 2017 financial results on May 25, 2017. The New Albany, Ohio-based Company reported y-o-y decline in revenue and earnings; however, the results were better than market estimates. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Get more of our free earnings reports coverage from other constituents of the Apparel Stores industry. Pro-TD has currently selected Duluth Holdings Inc. (NASDAQ: DLTH) for due-diligence and potential coverage as the Company announced on June 06, 2017, its financial results for Q1 FY17 which ended on April 30, 2017. Register for a free membership today, and be among the early birds that get access to our report on Duluth Holdings when we publish it.
At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on ANF; also brushing on DLTH. With the links below you can directly download the report of your stock of interest free of charge at:
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Earnings Reviewed
For the first quarter ended April 29, 2017, Abercrombie's net sales totaled $661.10 million, down 4% compared to net sales of $685.48 million for Q1 2016, with comparable sales for the reported quarter down 3%. The Company's revenue numbers topped analysts' expectations of $653.3 million
During Q1 2017, Abercrombie's net sales, on brand basis, grew 3% to $374.7 million for Hollister, while it dropped 11% to $286.4 million for Abercrombie compared to the year ago quarter. On a geographical basis, Abercrombie's net sales for Q1 2017 fell 4% to $409.1 million in the US and decreased 3% to $252.0 million in international markets compared to the year ago period. Abercrombie's direct-to-consumer sales grew to approximately 27% of the Company's total net sales for the reported quarter versus approximately 24% of the Company's total net sales in the prior year's comparable quarter.
For Q1 2017, Abercrombie's gross profit rate was 60.3% compared to 62.1% in Q1 2016 on a constant currency basis, primarily due to lower average unit retail, partially offset by lower average unit cost. The Company's stores and distribution expense for the reported quarter totaled $359.9 million, down from $369.1 million in the prior year's corresponding quarter, primarily due to expense reduction efforts and the realization of savings on lower sales, and partially offset by higher direct-to-consumer expense.
In Q1 2017, Abercrombie's marketing, general, and administrative expense totaled $109.9 million compared to $114.4 million in Q1 2016, primarily due to expense reduction efforts, partially offset by higher marketing expense. The Company's asset impairment charges for the reported quarter were $0.7 million.
Abercrombie's net other operating income for Q1 2017 was $1.7 million compared to $2.9 million in Q1 2016. The Company reported an operating loss of $69.9 million for the reported quarter, which included the adverse impact from y-o-y changes in foreign currency exchange rates of approximately $5.3 million compared to an operating loss of $54.9 million in the year ago same period.
Abercrombie reported a net loss of $61.7 million, or $0.91 per share for Q1 2017, compared with a loss of $39.6 million, or $0.59 per share, in Q1 2016. The most recent results include a non-cash income tax charge of $0.14 per diluted share related to a change in share-based compensation accounting standards, and an adverse impact of approximately $0.05 per diluted share related to a lower than expected core tax rate. On an adjusted basis, the Company posted net loss of $0.72 per share, ahead of Wall Street's expectations for a loss of $0.70 per share.
Balance Sheet
Abercrombie ended Q1 2017 with $421.4 million in cash and cash equivalents and gross borrowings under the Company's term loan agreement of $268.3 million compared to $490.98 million in cash and cash equivalents and $293.3 million in borrowings in the year ago same period. Abercrombie ended the quarter with $398.8 million in inventory, a decrease of 8% on a y-o-y basis.
Outlook
For Q2 2017, Abercrombie is expecting comparable sales to remain challenging with trend improvement expected in H1 20017. The Company estimates gross margin rate to decline slightly to last year`s adjusted non-GAAP rate of 61.0% with continued pressure in Q2.
For FY17, Abercrombie projects net income attributable to non-controlling interests of approximately $4 million. The Company expects capital expenditures to be approximately $100 million for FY17.
Abercrombie plans to open seven full-price stores in fiscal 2017, primarily in the US. The Company also plans to open two new outlet stores. In addition, Abercrombie anticipates closing approximately 60 stores in the US during the fiscal year through natural lease expirations.
Stock Performance
Abercrombie & Fitch's share price finished yesterday's trading session at $12.59, slightly up 0.48%. A total volume of 1.74 million shares have exchanged hands. The Company's stock price advanced 0.24% in the past one month and 7.88% in the last three months. Additionally, the stock gained 4.92% since the start of the year. Shares of the Company have a dividend yield of 6.35% and currently have a market cap of $856.25 million.
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