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News Summary: A&F shares surge on strong 3Q report

The Associated Press

FILE - In this Thursday, Dec. 4, 2008, file photo, a shopper hurries past the Abercrombie & Fitch store at Beachwood Place Mall in Beachwood, Ohio. Abercrombie & Fitch Co. delivered a pleasant pre-Christmas surprise to investors: the teen retailer raised its full-year earnings earnings guidance on a strong third-quarter performance, sending shares surging. The company, based in New Albany, Ohio, reported a 41 percent increase in its net income for the third quarter as international, domestic and direct-to-consumer sales strengthened. Its results beat Wall Street expectations.(AP Photo/Amy Sancetta)

BOUNCEBACK: Abercrombie & Fitch Co. reported an unexpectedly strong 41 percent increase in its third-quarter net income and the teen retailer raised its full-year earnings guidance. Revenue rose 8 percent.

THE BACKGROUND: The company, based in New Albany, Ohio, had been struggling to sell its preppy jeans and T-shirts when fashion trends are shifting and a rough economy has left teens around the world on tighter budgets.

THE OUTLOOK: The latest results suggest that the company's efforts to fix its merchandise mix are gaining traction. But revenue at stores open at least a year, a key indicator of a retailer's health, fell 3 percent. Analysts surveyed by FactSet had expected a steeper 8.7 percent drop.