Abercrombie & Fitch (ANF) reported earnings Thur 26 May 2016 (b/o)

** charts before earnings **

  

** charts after earnings **

Abercrombie & Fitch misses by $0.02, misses on revs and comps down 4%; expects comps to remain challenging in Q2 but to improve in 2H :

• Reports Q1 (Apr) loss of $0.53 per share, excluding non-recurring items, $0.02 worse than the Capital IQ Consensus of ($0.51); revenues fell 3.3% year/year to $685.5 mln vs the $709.48 mln Capital IQ Consensus. The gross profit rate for the first quarter was 62.1%, 410 basis points higher than last year. Excluding certain items last year, the gross profit rate reflected an improvement of 100 basis points on a constant currency basis, primarily due to higher average unit retails, partially offset by higher average unit costs.
• For fiscal 2016, co now expects: Comparable sales to remain challenging in Q2 but to improve in the second half of the year. Adverse effects from foreign currency on sales of ~$10 mln and on operating income of ~$15 mln, including the year- over-year impact from hedging. A gross margin rate up slightly to last year's rate of 61.9%, but down modestly in the second quarter. Operating expense dollars to be approximately flat to last year, with investments in marketing, store management and omnichannel offset by savings from expense reduction efforts.
• Based on the timing of these investments, the company expects operating expense dollars in the second quarter to be up 2% to 3% over last year. Continues to expect capital expenditures of $150 mln to $175 mln for the full year. The company plans to open ~15 new stores in fiscal 2016, including ~10 in international markets, primarily China, and ~5 in the U.S. In addition, the company anticipates closing up to 60 stores in the U.S. during the fiscal year through natural lease expirations.