Abercrombie Surges After Predicting Comeback at Hollister

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Can Abercrombie & Fitch Make a Comeback?

Abercrombie & Fitch Co. surged the most in more than two years after its teen-focused Hollister chain showed signs of improvement, a relative bright spot for a company struggling to make a comeback.

While Hollister’s same-store sales slipped 6 percent in the period, the decline was less severe than the previous quarter’s 11 percent drop. It also outperformed the Abercrombie & Fitch chain, giving investors hope that Hollister may help lead the company out of its slump.

“The Hollister improvement was encouraging,” said Anna Andreeva, an analyst at Oppenheimer & Co. “In general, this brand is struggling. Turnarounds take a long time.”

The stock gained 13 percent to $22.30 at the close in New York, the biggest increase since November 2012. Abercrombie shares had been down 31 percent this year through Wednesday’s close, battered by concerns that the company lacks direction.

Longtime Abercrombie CEO Michael Jeffries stepped down in December, sending the retail chain on a search for a new leader and a new vision. Though the company has been without a CEO for almost six months, it has been retooling stores and products in a bid to regain fashion credibility with teen shoppers. It’s also contending with flagging mall traffic and the strong dollar, which took a bite out of its international sales last quarter.

The New Albany, Ohio-based company posted a loss of 53 cents a share in the first quarter, excluding some items, with the currency fluctuations weighing on international results. Analysts had predicted a loss of 35 cents, according to data compiled by Bloomberg. The quarter ended on May 2.

‘Early Stages’

“We knew the first quarter was going to be difficult due to a number of factors, both internal and external,” Executive Chairman Arthur Martinez said in the statement. “Many of the actions we are taking to improve our business are in the early stages of implementation and have not yet been fully realized.”

Martinez pointed to Hollister as a reason for optimism, saying comparable sales trends had continued to improve this month.

“While our turnaround won’t be accomplished overnight, we believe the changes we are making will reinvigorate our iconic brands,” he said.

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