A&F's revenue up by 21% don't stop its fall

Thursday, 03 November 2011
A&F has dropped the most in more than 10 years after saying sales fell at European flagship stores last quarter. The retailer was hurt by a “slowing trend” in the region, while same-store sales in Japan and Canada continued to decline, according to a statement.
 
The shares slumped 21 percent to $58.50 at 10:53 a.m. in New York after dropping as much as 23 percent for the biggest intraday loss since Nov. 30, 2000. “The international division was seen as the key growth driver so the fact it slowed down has some investors very spooked,” Eric Beder, an analyst at Brean Murray Carret & Co. in New York, said of Abercrombie & Fitch. “People are wondering if this is a pause or a significant change.”
 
However, A&F’s total revenue for the quarter increased 21 percent to $1.08 billion. That is higher than the $1.07 billion that analysts expected. U.S. revenue, including online and catalog sales, rose 14 percent to $820.2 million. International revenue rose 56 percent to $255.7 million.Abercrombie & Fitch Co.'s stock plunged after it reported sluggish overseas growth for the third quarter, even as revenue at all stores open at least a year increased 7 percent. That beat expectations for the teen retailer, but the lonelier international picture sent its shares down more than 20 percent.

In contrast, British online fashion champion, ASOS, reported a strong first half performance with retail sales up 60% to Ł210.9m, what means acceleration from last year where they were ahead by 50% in the first half. “This reflects the increasing contribution of our International business which grew by 150% in the period, representing 58% of our sales (37% last year),” Nick Robertson, CEO, commented, adding thta “During the half we launched three more country specific sites in Australia, Italy and Spain taking the total number to seven (including the UK). “Our retail margin improved by 170bps on the prior year and we increased our profit before tax and exceptional items (relating to the warehouse move) by 66% to Ł11.7m. “With our continued rapid and profitable international expansion, we remain confident of achieving full year results in line with market expectations.”

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