Abercrombie reported net income of $3.0 million ($0.03 Diluted EPS) for the first quarter ended Apr 28, an 88% decline compared to the year-ago period. Net sales increased 10.1% to $921.2 million, as U.S sales rose 1% to $644.3 million and International sales jumped 42% to $277.0 million. Same-store sales declined 5% during the quarter; Comps by segment were: Abercrombie & Fitch -4%, abercrombie kids -11%, and Hollister -5%. Online sales (which are not included in comparable store sales) increased 40% to $148.2 million during the quarter. CEO Mike Jeffries said: “While we are disappointed that European sales trends remain challenging in a very difficult macroeconomic environment, we are largely satisfied with our overall performance for the quarter in that context. Our U.S. business, including direct-to-consumer, increased 4% on a comparable basis, on top of a strong performance last year. Our international business comped negatively, but the economics remain strong and we delivered overall international sales growth of 42% including a strong performance in direct-to-consumer. With cotton cost issues now largely behind us, we look forward to strong year over year earnings growth in the back half of the year.” Based on first quarter trends, the company is now projecting same store sales to be down by a mid-single digit percentage on a full-year basis. Notwithstanding lower sales expectations, diluted earnings per share are expected to be in the range of $3.50 to $3.75, with lower sales offset by a higher projected gross margin rate, lower expenses, and a lower share count at the end of the first quarter.
