All is not well at
Shares of the teen clothing retailer slid Thursday after the company reported results showing that it is among the the ranks of retailers struggling with slow traffic.
"Our results for the quarter reflect significant traffic headwinds," said executive chairman Arthur Martinez in a statement accompanying the company's first-quarter results, "particularly in international markets and in our U.S. flagship and tourist stores, resulting in negative comparable sales."
Abercrombie's results were particularly troubling for analysts and investors that believed the company was turning things around.
"The overall decline at the Abercrombie brand is particularly telling and reverses a year of gradual improvements to shrinking sales. Hollister’s performance was somewhat better, but even here previously positive growth has now turned flat," Conlumino analyst Neal Saunders wrote in a note to clients. "These declines, together with sharper discounting, have taken their toll on the bottom line ... While this is an improvement on last year’s $63 million loss, it is a disappointing outcome given the progress that was being made.
The retailer has plenty of company. Others including Macy's, Tiffany and Nordstrom are dealing with slower traffic as shoppers pivot to doing more of their shopping online or are spending more of their money on other things like vacations, eating out or other experiences. Fast fashion brands such as H&M are also stiffening competition.
Abercrombie, which also includes the Hollister brand, reported a first-quarter loss of $39.6 million, or 59 cents per share. That compares with a loss of $63.2 million or 91 cents in the same period last year. On an adjusted basis, the company reported a loss of 53 cents per share missing the average estimate of a loss of 51 cents per share expected by analysts polled by S&P Global Market Intelligence.
Revenue fell 3.4% to $685.4 million, from $709.4 million, a year earlier. Sales at stores open at least a year, an industry metric that removes the impact of newer stores, dropped 4%
Sales for the Abercrombie brand decreased 5% to $323.3 million and 2% to $362.1 million for Hollister. Digital sales, which would include transactions made online or on mobile devices, grew to 24% of total sales up from 23% last year.
The stock closed down $3.93, or nearly 16%, at $21.15.