Abercrombie & Fitch reported unaudited results which reflected net income of $3.0 million for the thirteen weeks ended April 28, 2012, compared to net income of $25.1 million for the thirteen weeks ended April 30, 2011. Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said:
“While we are disappointed that European sales trends remain challenging in a very difficult macroeconomic environment, we are largely satisfied with our overall performance for the quarter in that context. Our U.S. business, including direct-to-consumer, increased 4% on a comparable basis, on top of a strong performance last year. Our international business comped negatively, but the economics remain strong and we delivered overall international sales growth of 42% including a strong performance in direct-to-consumer. With cotton cost issues now largely behind us, we look forward to strong year over year earnings growth in the back half of the year.”
In terms of comparable store sales for the quarter, it decreased by 5% including Hollister, which also decreased by 5%. Unfortunately, during this economic hardship in Europe, Abercrombie & Fitch opened a flagship in Hamburg and seven international Hollister stores during the quarter.
The outlook for Abercrombie & Fitch does not look great. Based on first quarter trends, the Company is now projecting same store sales to be down by a mid-single digit percentage on a full-year basis. They still plan on opening international Abercrombie & Fitch flagship locations in Hong Kong, Munich, Dublin and Amsterdam in 2012 along with opening close to 40 international Hollister stores throughout the year.
The effects of the economy in Europe have impacted many youth culture fashion brands and retailers as evidence by Abercrombie’s recent financial reports. For brands that have been looking to Europe for expansion outside of a saturated American market, future plans are now facing a new reality that the European marketplace may not provide what forecasters predicted.