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Abercrombie & Fitch (ANF) 3Q Earnings Jump, Lifts 2012 View; Shares Soar

 November 14, 2012 08:06 AM

(By Balaseshan) Abercrombie & Fitch Co. (NYSE: ANF) reported a 40.5% jump in quarterly earnings on higher sales. The specialty retailer's results beat Street's expectations, and it raised 2012 profit view above consensus, sending its shares 26.72% higher in premarket.

Earnings for the third quarter were $71.51 million or $0.87 per share, higher than last year's $50.91 million or $0.57 per share.

Sales increased 9% to $1.17 billion. Total comparable store sales decreased 3% relative to last year.

Analysts, on average, polled by Thomson Reuters had expected a profit of $0.59 per share on revenue of $1.11 billion for the third quarter.

[Related -Abercrombie & Fitch Co. (ANF) Q3 Earnings Preview: A Cold November Rain?]

Including direct-to-consumer sales, U.S. sales were about flat at $818.6 million, while international sales climbed 37% to $351.1 million. Total company direct-to-consumer sales, including shipping and handling, grew 20% to $158.3 million.

By brand, comparable store sales decreased 4% for Abercrombie & Fitch, 3% for abercrombie kids, and 1% for Hollister Co. Total sales by brand were $440.0 million for Abercrombie & Fitch, $99.8 million for abercrombie kids and $602.5 million for Hollister Co.

Gross margin increased 240 basis points to 62.5%, driven by a decrease in average unit cost and an international mix benefit, partially off-set by a slight decrease in average unit retail and an adverse effect of exchange rates.

[Related -Abercrombie & Fitch Co (ANF): Lack Of Visibility May Keep Investors On Sidelines]

Looking ahead into the fiscal 2012, the company raised its earnings guidance to range of about $2.85 to $3.00 per share from previous forecast of about $2.50 to $2.75 per share, while Street predicts $2.48 per share.

This projection assumes a mid single digit percentage decrease in comparable store sales for the fourth quarter and a slightly higher gross margin rate for the quarter relative to the year-to-date rate.

In addition, the projected earnings per share guidance assumes a full year diluted weighted average share count of about 83.1 million shares and does not include the impact of potential share repurchases in the fourth quarter.

On November 13, the Board of Directors declared a quarterly cash dividend of $0.175 per class A common share, payable on December 11 to shareholders of record on November 26.

ANF closed Tuesday's regular session down 0.51% at $31.18. The stock has been trading between $28.64 and $57.56 for the past 52 weeks.



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