Abercrombie dials back sales forecasts

Image: Ryan McKnight / CC BY 2.0

Abercrombie & Fitch posted a bigger than expected sales decline for the second quarter, in spite of efforts to modernize its store base for a new generation of shoppers.

This trend shows few signs of abating, as management no longer expects comp-store sales to improve this year.

It's a turnabout from the first quarter, when management thought results would improve later in the year.

But comp-store sales fell 4 percent in the quarter, more than expected, as traffic to the company's flagship locations remained slow. This trend is now expected to continue through the rest of the year.

"As we look to the rest of the year, we now expect flagship and tourist locations will continue to weigh on the business," said Arthur Martinez, executive chairman. "Recognizing we are in a challenging environment, we are confident, however, that we are focusing on the right priorities and we expect to see traction in our business as we introduce new product and invest in marketing to drive awareness and relevance for our brands."

Abercrombie has been investing in digital properties and store redesigns but is still waiting for returns, although digital growth was strong for the second quarter and now stands at roughly 23 percent of total company net sales, compared to approximately 21 percent of total company net sales last year.

Last week, the retailer announced plans to sell merchandise in Europe through a partnership with Zalando.