Abercrombie & Fitch Co. (ANF), the teen retailer, rose the most in six months after authorizing additional share buybacks and reporting second-quarter profit that topped the company’s preliminary report earlier this month.
The shares advanced 9 percent to $35.23 at the close in New York, the biggest one-day gain since Feb. 6. The New Albany, Ohio-based company today reported profit excluding some items of 19 cents a share, 1 cent higher than its Aug. 1 forecast. The stock, which tumbled 15 percent on Aug. 2, had the biggest jump in the Standard & Poor’s 500 Index.
Abercrombie, which got 25 percent of its sales abroad last year, has faced declining comparable-store sales amid a tepid economic environment and an overseas expansion that has cannibalized its own business in some areas. The company boosted its buyback authorization by 10 million shares to 22.9 million and said in a statement today that it will be “disciplined and judicious” with shareholder capital.
“Fundamental deterioration and ongoing risk to operational performance is balanced by re-engineering of the balance sheet and share repurchases,” Stephanie Wissink, an analyst at Minneapolis-based Piper Jaffray Cos., wrote in a note today. The buybacks may boost fiscal 2014 profit by as much as 25 cents a share, wrote Wissink, who rates the shares neutral.
Net income in the second quarter fell 52 percent to $15.5 million, or 19 cents a share, from $32 million, or 35 cents, a year earlier, the company said. Analysts had estimated 17 cents on average, according to data compiled by Bloomberg. The company reiterated its fiscal 2013 profit forecast of $2.50 to $2.75 a share, which it cut earlier this month from a prior projection of $3.50 to $3.75 based on lower sales.
Abercrombie’s comparable-store sales fell 10 percent in the quarter, the company said in the statement. Sales are expected to drop 10 percent in the second half of the year, according to the retailer.
The company has said it’s paring back international expansion plans and now expects to open 30 Hollister stores outside of the U.S. in fiscal 2012, down from about 40, and is freezing commitments to new flagship stores outside of its planned Shanghai location.
“Setting aside our future store opening plans, we are very focused on improving the performance of our existing stores,” Chief Executive Officer Mike Jeffries said on a conference call with analysts today. “We remain very cautious about the macroeconomic environment, but we are hopeful that with our comparable sales for the past few weeks running a little above our second quarter trend, we are beginning to see at least stabilization in the trend.”
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