Abercrombie & Fitch 4th-quarter profit falls, partly on charge related to Ruehl store closings

Abercrombie & Fitch 4Q profit slips on charges

NEW YORK — Costs to close its Ruehl stores helped push Abercrombie & Fitch Co.’s fiscal fourth-quarter profit lower Tuesday.

Still, adjusted results topped analysts’ expectations as the clothing retailer works on strengthening its business overseas and domestically.

Abercrombie, known for preppy fashions and high prices, has been pinched by budget-conscious consumers who are making fewer discretionary purchases and seeking out bargains. But Abercrombie’s business, particularly its men’s area, appears to be gaining some traction as the retailer has worked hard to improve its fashions and lower its prices.

Earlier this month the company reported better-than-expected January sales, with sales at stores open at least one year, a key measure of a retailer’s health, up 8 percent. This was the first monthly increase in the key sales figure since April 2008.

Abercrombie said its fourth-quarter net income fell 31 percent to $47.5 million, or 53 cents per share, for the period ended Jan. 30. That compares with a profit of $68.4 million, or 78 cents per share, a year ago.

Taking out a charge related to the Ruehl store closings and other items, profit was 91 cents per share. That beat the 87 cents-per-share estimate of analysts surveyed by Thomson Reuters. These estimates typically exclude one-time items.

Abercrombie’s board approved the shutdown of its 29 Ruehl stores and related direct-to-consumer operations in June. The brand’s closure was completed in the fourth quarter.

Sales slipped 5 percent to $936 million from $980.8 million, short of Wall Street’s $953.7 million.

Shares rose 47 cents to $34.32 in morning trading.

Abercrombie, based in New Albany, Ohio, has struggled with falling sales for two years as consumers have headed to lower-priced competitors like American Eagle and Aeropostale during the recession in order to stretch their dollar further.

The company is feeling more pressure among its U.S. shoppers, as domestic sales fell 12 percent in the quarter, but international sales surged 86 percent.

Abercrombie plans to expand overseas this year and concentrate on boosting profitability domestically, CEO and Chairman Mike Jeffries said in a statement. Jeffries told investors that there’s “huge demand” for its products globally, and he said the company is “dead on” in how it’s pricing the products.

Company officials said it aims to have its operating profit margin be at least 15 percent for 2012, fueled in part by accelerating international expansion.

Abercrombie said it plans to open one of its namesake stores in Copenhagen and another in Fukuoka, Japan, during fiscal 2010. The retailer also expects to open a Hollister Epic store in New York and about 30 mall-based Hollister stores internationally.

Sales at stores open at least a year dropped 13 percent in the quarter. This figure is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.

Abercrombie reported declines across all brands for sales at stores open at least a year. At Hollister, the key sales figure slipped 19 percent, while abercrombie kids posted an 11 percent decline. For its namesake stores, the key sales figure fell 8 percent.

Abercrombie’s full-year profit sagged to $254,000, or break-even, from $272.3 million, or $3.05 per share, in the prior year.

Annual sales slid 16 percent to $2.93 billion.

Abercrombie had 1,096 stores at the end of fiscal 2009.

AP Retail Writer Anne D’Innocenzio in New York contributed to this report.