Abercrombie & Fitch said Thursday its sales tanked 34% during the first quarter because of store closings during the coronavirus pandemic and people purchasing less apparel as they holed up at home.
The Hollister owner’s shares sank 6% in early trading.
Net sales dropped to $485.4 million from $734 million a year earlier. Sales at its namesake Abercrombie brand were down 30% while Hollister sales were down 36%. The company did not break out same-store sales during the quarter.
Its net loss for the period ended May 2 widened to $244.1 million, or $3.90 per share, from $19.2 million, or 29 cents a share, a year earlier. Excluding one-time charges, the company lost $3.29 per share.
The retailer is not offering a second-quarter or full-year outlook at this time.
Analysts had been calling for Abercrombie to report an adjusted net loss of $1.39 per share on revenue of $497.3 million, based on Refinitiv estimates. However, it is difficult to compare reported earnings to analyst estimates for Abercrombie’s first quarter, as the coronavirus pandemic continues to hit global economies with earnings impacts that are difficult to assess.
Abercrombie joins a number of mall-based retailers such asMacy’s and Victoria’s Secret-owner L Brands that are struggling during the crisis more than grocery chains and companies like Walmart that sell essentials.
CEO Fran Horowitz said that as of Thursday, roughly half of Abercrombie’s global store base, or 409 shops, is back open for business.
She said first-quarter digital sales globally were up about 25% year over year, and that they have accelerated further into May.
As Abercrombie’s stores reopen during the Covid-19 crisis, productivity is returning to about 80% in the U.S. and 60% in the Europe, Middle East and Africa region, according to Horowitz.
In the U.S., “we are encouraged by recent results, with a customer returning to stores at an even quicker pace than in China,” she said during a post-earnings call with analysts.
Meantime, the company said it is continuing to evaluate its real estate, as it has a “couple hundred leases” coming up for renewal annually. It says it has trimmed its gross square footage by 14% since 2015, which has included shutting some of its towering flagship locations.
“This year should be no different,” CFO Scott Lipesky told analysts. “As we have stated before, we are willing to walk away from any location, if we cannot get terms that work for us. The disruption, we have seen from the pandemic only reinforces this perspective.”
Abercrombie ended the quarter with $704 million in cash and equivalents on hand. And the company said it had inventories of $427 million, down 1% from a year earlier.
“While there is still work to be done on the inventory balances, at least it is below last year’s levels despite the significant disruptions as well,” Telsey Advisory Group analyst Dana Telsey said in a note to clients.
“While this year is a lost one across the space from an earnings perspective, we do see improved underlying brand health,” she added.
As of Wednesday’s market close, Abercrombie shares were down about 24.5% this year. The company has a market cap of $803.8 million.
— CNBC