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American lifestyle retailer that focuses on casual wear, Abercrombie & Fitch’s second-quarter net sales decreased 0.2percent to $841.1 million, and increased 1percent on a constant currency basis compared to last year as the cloth retailer continues to feel the pain of trade spat between U.S and China.
Comparable sales were flat against positive comparable sales of 3percent last year. Gross profit rate of 59.3percent was down 90 basis points to last year. Operating expense, excluding other operating income, of $537.8 million included $45.0 million of flagship store exit charges.
Operating expense deleveraged 370 basis points and 470 basis points on a GAAP and an adjusted non-GAAP basis, respectively, reflecting a 530 basis point adverse impact from flagship store exit charges.
Operating loss of $39.5 million, operating margin decreased 470 basis points from last year to a loss of 4.7%, primarily driven by the adverse impact of flagship store exit charges of 530 basis points.
Excluding asset impairment charges last year, adjusted non-GAAP operating margin decreased 580 basis points or 530 basis points on a constant currency basis as compared to last year.
Hundreds of U.S. businesses including retailers and footwear companies have urged President Donald Trump to scale back rather than escalate tariffs on Chinese goods, warning they would jack up consumer prices and trigger job losses.
To mitigate this risk, the teen apparel maker has been aiming to cut the amount of goods sourced from China to below 20percent in fiscal 2019 from 25percent a year earlier.
Fran Horowitz, Chief Executive Officer, said, trends improved throughout the second quarter, enabling it to deliver constant currency revenue growth and meet our previously-issued comp and gross profit rate outlook, while continuing to tightly manage expenses.
“Importantly, we have had a solid start to back-to-school in the U.S. and we look forward to building on that momentum in the back half through exciting product and cohesive marketing campaigns,”
Abercrombie & Fitch is a leading, global specialty retailer of apparel and accessories for Men, Women, and Kids through three renowned brands.
For more than 125 years, the iconic Abercrombie & Fitch brand has outfitted innovators, explorers , and entrepreneurs.
