Abercrombie & Fitch Co.'s ANF -0.43% second-quarter earnings plunged 52% as the teen apparel-retailer faced weaker-than-expected sales trends, especially abroad, and it announced plans to boost its share buyback program.
The retailer earlier this month warned of a difficult quarter and cut its outlook, citing difficult macroeconomic conditions in both the U.S. and Europe. Analysts voiced their surprise and concern about the high level of inventory and markdowns, along with worries about missed fashion trends.
"We saw a further deceleration in the trend in our international stores, while our U.S. chain stores also earned negatively for the quarter for the first time since 2009," Chief Executive Mike Jeffries said Wednesday. The company reported earlier this month that U.S. same-store sales were down 5%, while dropping 26% on an international basis.
Abercrombie has shown weakness in recent quarters on disappointing sales in Europe and an increase in markdowns. In June, the company unveiled plans to close another 180 stores over the next few years as it looks to improve margins in its U.S. stores.
Abercrombie also previously announced plans to reduce fiscal 2012 international Hollister chain-store openings to about 30 stores from previous plans for nearly 40 stores. It also intends to stop new flagship-store commitments, other than a planned Shanghai location.
Today, the company said it increased its existing share buyback plan by 10 million shares, bringing the number available for repurchase to 22.9 million shares. It has about 83 million outstanding.
For the quarter ended July 28, Abercrombie reported a profit of $15.5 million, or 19 cents a share, down from earnings of $32 million, or 35 cents a share, a year earlier. The company earlier this month projected earnings of 15 cents to 18 cents a share, well short of estimates at the time.
Gross margins fell to 62.5% from 63.6%.
Earlier this month, the company reported a total sales increase of 4% to $951.4 million, well below views, and a same-store sales drop of 10%.
Abercrombie & Fitch (A&F) (NYSE: ANF) is an American retailer that focuses on casual wear for consumers aged 18 to 22. It has over 300 locations in the United States, and is expanding internationally.