Abercrombie & Fitch 2Q net income jumps

AP News
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Posted: Aug 17, 2011 11:11 AM
Abercrombie & Fitch 2Q net income jumps

Abercrombie & Fitch Co. said Wednesday its second-quarter net income rose 64 percent, boosted by higher demand for its preppy fashions in the U.S. and Europe.

Results were better than expected and the company's shares rose about 83 cents, or 1 percent, to $71.85.

The retailer said Wednesday that its net income rose to $32 million, or 35 cents per share, from $19.5 million, or 22 cents per share last year. Analysts expected earnings of 29 cents per share.

As previously announced, revenue rose 23 percent to $916.8 million from $745.8 million last year. U.S. sales rose 12 percent to $684.9 million. International sales rose 74 percent to $231.9 million.

Revenue in stores open at least one year rose 9 percent, including a 5 percent increase at Abercrombie & Fitch, a 7 percent increase at Abercrombie kids stores, and a 12 percent increase at its popular surf-themed Hollister stores.

After losing market share to cheaper competitors during the recession, Abercrombie & Fitch has rebounded as it focuses on international expansion and closing underperforming stores. The company plans to open 40 international Hollister stores this year and close 60 to 65 U.S. stores.

But like all retailers, Abercrombie & Fitch Co. is facing higher prices of commodities such as cotton during the key back-to-school season.

"Costing pressures will be greater in the second half of the year, and macroeconomic uncertainty has increased," said CEO Mike Jeffries. "However, our strong top-line momentum and overall performance for the past several quarters give us confidence that we are well positioned to navigate through this environment."

The news comes a day after the New Albany, Ohio-based company issued a statement saying that it offered "substantial payment" to a Michael "The Situation" Sorrentino, a member of the cast of the MTV Reality Show "Jersey Shore," to stop wearing its clothing, saying association with the cast member, known for boorish behavior, could cause "significant damage to our image." Abercrombie said it had extended the offer to other cast members as well.

"Management may be correct in asking (and offering to pay) the cast of `Jersey Shore' to stop donning its logo-wear," said Wall Street Strategies analyst Brian Sozzi. "It doesn't need the infusion of MTV and side job dollars from the Jersey Shore crew, if the second quarter of 2011 was any indication."