Shares of clothing brand Abercrombie & Fitch plummeted on Wednesday after the apparel company reported much weaker same-store sales than analysts had expected. In addition, the retailer said it has plans to close at least three more big stores in the US; this includes a Hollister location in none other than New York.
More specifically, the stock was down an astonishing 23 percent in early trading, on Wednesday. By market close, Abercrombie posted losses of more than 21 percent. This marks the retailer’s worst day since July 10 of 2017.
What is, perhaps, more alarming is that just the news of this sent shares of retail rival American Eagle Outfitters down 5 percent, too.
For the fiscal first quarter, then, Abercrombie’s same-store sales are only up 1 percent, which is just shy of analyst estimates of 1.3 percent. This shortfall is part of a bigger loss, a first fiscal quarter loss of $19.2 million. That is equivalent to 29 cents per share. Perhaps the good news is that this loss appears far better than the net loss of $42.5 million—or 62 cents per share—from the same period last year. Furthermore, the losses are far narrower than what analysts had expected: an adjusted loss of 43 cents per share.
All of this seems a bit of a surprise when you consider that Abercrombie & Fitch reported sales of $734 million. Not only is this up from $730.9 million last year, but it beat analyst expectations of $733.4 million.
But looking at some of the numbers Abercrombie’s Hollister apparel brand shows signs of slowing. Same-store sales at this brand were up only 2 percent in the quarter, which missed expectations of 3.3 percent. That might not seem too significant but same-store sales from last year soared 6 percent.
On top of this, second quarter expectations for Abercrombie alludes to net sales holding flat at 2 percent. This stagnancy also falls short of analyst estimates of 2.8 percent growth. By the end of the year, Abercrombie & Fitch calls for net sales to grow between 2 and 4 percent.
Abercrombie & Fitch CFO Fran Horowitz comments, “We continue to believe in stores and are committed to delivering intimate, omni-channel brand experiences that closely align with our customers’ needs,” noting that they are adding services like physical store pickup from online sales.