Abercrombie & Fitch shows signs of a turnaround

Troubled teen retailer Abercrombie & Fitch (NYSE: ANF) posted better-than-expected first quarter earnings results, losing less money than analysts had predicted as women's clothing saw a boost in sales and drew in more shoppers during the quarter.

It was the first time in six quarters that the retailer beat quarterly earnings expectations as fast-fashion chains, like H&M, Zara and Forever 21 take the lead in attracting trendy teen shoppers.

Abercrombie has tried to lure back customers in recent years amid controversy surrounding the retailer's leadership, disappointing sales and inventory challenges. In an effort to lure shoppers back into stores, Abercrombie has been revamping mall-based locations and is preparing to give Hollister stores a makeover, including a lower pricing structure to cater to younger customers and their budgets. Abercrombie also said it is looking into more U.S.-based supply sources that will allow a faster turnover of goods to keep up with quickly-changing trends.

In addition to repositioning Hollister, Abercrombie said it may consider adding more third-party brands to the retailer's product assortment, as well as selling merchandise through third-party channels. The company has carried Keds merchandise since last fall, and the partnership has been "very successful" CEO Mike Jeffries said in an earnings call.

Despite the company's best efforts, it still can't shake the bad reputation of Jeffries, who has served as Abercrombie's chief executive since 1992. He came under fire for controversial comments about the kind of customers he wants at Abercrombie and his remarks have been a pain point for the company and hurt the brand's reputation among shoppers. Earlier this year, the chain cut Jeffries's pay and stripped him of the chairman role.

Abercrombie & Fitch reported $822 million in first quarter revenue, a 2 percent decline over the prior-year period but beating expectations of $804 million. Overall company same-sales fell 4 percent during the quarter, with U.S. same-store sales also falling 4 percent. By brand, same-store sales fell 1 percent for Abercrombie & Fitch, 6 percent for Abercrombie Kids and 7 percent for Hollister.

For more:
-See this Wall Street Journal article

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