Abercrombie & Fitch stock falls

Abercrombie & Fitch plunged the most in more than 21 months after forecasting profit for the current quarter that was less than analysts estimated amid declining traffic at its stores.

The company, whose most profitable store globally is based in Dublin, saw its shares slide 17% in New York and earlier fell as much as 21% for the biggest intraday drop since Nov 3, 2011.

Third-quarter profit will be as much as 45c a share, the company said yesterday in a statement, while declining to forecast earnings beyond then. Analysts estimated $1.07, on average.

Chief executive Mike Jeffries has been struggling to reconnect with the clothing chain’s teenage customers who have become less enamoured of Abercrombie’s fashions, half- naked models and cacophonous stores.

On top of that, consumers concerned about the unsteady economy have been limiting purchases of non-essential items.

“People are completely shocked at the fact that they’re not able to give visibility, that the depths of traffic declines in July are what they assume will continue in the third quarter,” Stephanie Wissink, a Minneapolis-based analyst at Piper Jaffray Cos., said in an interview. She has the equivalent of a buy rating on the shares.

Sales at stores open at least a year and through its websites fell 10% in the quarter ended Aug 3, including an 11% US decline.

Comparable-store sales at New Albany, Ohio-based Abercrombie & Fitch slid 6% and 13% for Hollister. Revenue fell 0.6% to $945.7m, trailing analysts’ projection of about $1bn, while net income slid 33% to $11.4m, or 14 cents a share.

After taking the helm in 1992, Jeffries turned a chain that originally made safari and camping gear for the likes of Theodore Roosevelt and Ernest Hemingway into a teen emporium where sex met Ivy League. He used Abercrombie’s reputation for quality to charge more for youthful styles, recruiting all-American teens and college-aged kids to model and work as salesmen.

“We are not satisfied by our results and are working hard to improve our trends for the third quarter and beyond,” Jeffries said.

Bloomberg