For the quarter, Abercrombie & Fitch reported that its profit climbed to $216.8 million, boosted by strong sales from its Hollister Co. chain. Lower theft rate and higher profit margins also offset deeper discounts and the company posted earnings of $2.40 per share. Analysts were expecting the retailer to show earnings of $2.36 per share in the quarter.
Abercrombie & Fitch also announced an 8% growth in revenues, to $1.23 billion, up from $1.14 billion a year earlier when the company benefited from an extra week. For the quarterly same-store sales though, the retailer posted a decline of 1%.
Revenue during the period was helped by a 0.8% increase in gross profit that benefited from higher margins early in the quarter. In addition, smaller values for the rate of shrinkage overshadowed the company's discounts during the holiday and post-holiday periods. Analysts had forecast $1.25 billion in revenue, according to Thomson Financial.
The apparel retailer had a pretty volatile 2007, as the company had to face continued fears over a possible recession. The slumping housing market and credit crises brought a slowdown in consumer spending whose effects are reflected in the company's earnings.
However, Abercrombie showed an improved performance from 2006 and posted a full-year profit of $475.7 million, or $5.20 per share, up from $422.2 million, or $4.59 per share, the previous year. Sales also gained 13% to $3.75 billion, up from $3.32 billion a year ago.
Looking ahead, the retailers plans to boost its earnings this year by adding 110 new stores in North America and four in Britain. Abercrombie also forecast a profit in the range of $1.61 and $1.65 a share for the first half of 2008.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.