ABERCROMBIE & Fitch Co (ANF.N) reported comparable sales and profit far below Wall Street expectations today, blaming a drop in store visits by shoppers, and the teen retailer said business will decline even more during the current back-to-school quarter.
The company said comparable sales, which include online sales and sales at stores open at least a year, fell 10pc in the second quarter, ended August 3. Analysts had expected a drop of just 2.5pc.
Abercrombie also issued a weak profit forecast, and its shares tumbled 19pc to €28.45 ($37.95) in premarket trading.
The company and its rivals, Aeropostale Inc (ARO.N) and American Eagle Outfitters Inc (AEO.N), have struggled as young shoppers appear less interested in their logo-centric clothes and more eager to shop for electronics or go to chains like Zara, Forever 21 and H&M that offer greater variety in apparel more quickly.
"One generation of customers has moved on and the next generation doesn't see Abercrombie as cool," said Erik Gordon, a professor at the University of Michigan's Ross School of Business.
The drop-off in business in the second quarter was felt most acutely at Abercrombie's Hollister Co chain, its largest, where comparable sales fell 13pc. At its name-sake chain, comparable sales were down 6pc.
Back in May, Abercrombie blamed poor sales in the first quarter on its inability to get enough merchandise on shelves fast enough, and forecast only a small decline for the second quarter.
Overall, revenue in the second quarter fell 1pc to $945.7m, well below the $996.2m analysts expected. The one bright spot was international revenue, which rose 15pc.
Abercrombie expects a profit of 40c to 45c a share for the third quarter, while analysts anticipated $1.06. The company said it would not give projections beyond that, citing uncertainty around recent customer traffic trends.
For the second quarter, the company said net income fell to $11.4m, or 14c per share, from $17.1m, or 20c per share, a year earlier.
Excluding items related to a project to lift profits, earnings were 16c per share, well below Wall Street forecasts for 28c.
Aeropostale is due to report quarterly results after the market close. American Eagle reported on Wednesday, issuing a weak forecast.