(Bloomberg)—Abercrombie & Fitch Co. plunged as much as 24%, the most in almost two decades, after reporting quarterly sales that fell short of Wall Street’s expectations.
Same-store sales, a key gauge of retail success, rose 1% companywide in the first quarter, trailing the 1.4% estimate of analysts, according to Consensus Metrix. Furthermore, the company sees same-store sales as flat in the coming quarter.
Abercrombie’s California-themed Hollister brand, which targets teens, saw its sales growth start to taper off. The product line remains a key source of revenue for the company, so the results -- same-store sales for the brand rose 2%, instead of the estimated 3.4% -- are sparking disappointment among investors. The company said it would close three more flagships -- including its Soho Hollister store in New York City. This will bring the total of flagship closures to five since 2017, and more could be coming, the company said on a conference call. The namesake Abercrombie brand did show signs of rebounding. Same-store sales grew 1.5% compared with estimates for a decline of 1.5%. Amid a deepening trade war, Chief Executive Officer Fran Horowitz said the company is reducing the amount of merchandise it gets from China. The company will source less than 20% of its products from the country this year, compared with 25% in fiscal 2018, she said on a call with investors.
Abercrombie shares fell to as low as $19.03 in New York, erasing the stock’s gain this year through Tuesday’s close.
--With assistance from Cécile Daurat.To contact the reporters on this story: Jonathan Roeder in Chicago at [email protected]; Jordyn Holman in New York at [email protected] To contact the editors responsible for this story: Anne Riley Moffat at [email protected] Lisa Wolfson
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