Abercrombie & Fitch beats by $0.17, beats on revs; sees further comparable sales trend improvement
Reports Q2 (Jul) earnings of $0.12 per share, excluding non-recurring items, $0.17 better than the Capital IQ Consensus Estimate of ($0.05); revenues fell 8.2% year/year to $817.8 mln vs the $811.11 mln consensus. Q2 comps declined 4% vs. expectations for a decline of 6%. Q2 adj gross margin of 62%, ex items, in line with expectations.
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2H guidance:
- Further comparable sales trend improvement, skewed towards the fourth quarter.
- Continued headwinds from foreign currency exchange rates based on current exchange rates.
- Gross margin rate to be ~flat compared to last year, but up on a constant currency basis.
- "In our second quarter, we delivered a meaningful sequential improvement in comparable sales, stabilized gross margins and achieved significant expense reductions. Our results exceeded what we signaled in our first quarter earnings call and give us confidence that we are on the right track, although we recognize that we still have much to achieve."
- Sequential improvements in comparable sales trends were driven largely by Hollister and abercrombie kids and internationally.