Teen apparel retailer Abercrombie & Fitch posted a bigger-than-expected drop in quarterly sales. Net sales fell 6.5 per cent in the 15th straight quarter. The company’s brands include Hollister and Abercrombie Kids. Comparable sales at its flagship Abercrombie stores fell 14 per cent in Q3 compared with a five per cent drop in year-earlier period. Sales at the company’s established stores fell six per cent. Net income attributable to the company fell 12 cents per share in the quarter from 60 cents per share a year earlier.
Abercrombie and other apparel retailers have struggled with increasing competition from fast-fashion retailers such as H&M and Inditex's Zara that offer trendier but cheaper clothing. Online and off-price retailers have also lured shoppers away with discounted offerings.
In addition to closing stores, Abercrombie is tweaking its existing fleet. It will complete 64 remodels for its Hollister label this year and will test a new Abercrombie prototype store in early 2017.
It continues to maintain a conservative financial policy, with moderate debt and leverage levels and very good liquidity. Balance sheet cash continues to amply exceed funded debt levels. This is expected to remain the case as the company further implements its turnaround strategy.