On Friday, shares of American mall staple Abercrombie & Fitch (ANF - Free Report) are sliding, down around 13% in morning trading after the company reported third quarter fiscal 2016 financial results before the bell.
Adjusted non-GAAP earnings per share came at two cents, not even coming close to the Zacks Consensus Estimate 19 cents per share and falling 95% year-over-year. This number excludes 9 cents from non-recurring items. Revenues of $821.7 million also missed our consensus estimate, declining 6% year-over-year.
Total company comparable sales declined 6% in the quarter. Abercrombie saw a 14% decrease in comps, while Hollister’s comps were flat. Direct-to-consumer and omnichannel sales grew to approximately 23% of total company net sales for the third quarter, compared to approximately 21% of total company net sales last year.
"As expected, our third quarter was challenging. While Hollister improved sequentially, it was more than offset by disappointing performance in A&F. On a total company basis, conversion trends remained positive across both channels and the direct-to-consumer business grew domestically and internationally. In addition, we remained disciplined as expense and inventory were well controlled,” said Arthur Martinez, Executive Chairman of Abercrombie.
Abercrombie has opened 13 stores year-to-date, including five outlet stores, and expects to open seven new stores in Q$, including five in China and two in the U.S. The company also anticipates closing approximately 35 stores in the U.S. in Q4 through natural lease expirations, in addition to the 15 stores closed year-to-date.
Looking ahead to Q4, Abercrombie expects comparable sales to be “challenging” but to improve from the third quarter. The company also expects continued adverse impact from foreign currency on sales and operating income.
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