American fashion & lifestyle retailer, Abercrombie & Fitch Co. recently announced its decision to shut down a few flagship locations, along with results for the first quarter ended May 4, 2019. The company’s net sales increased to $734.0 million, while gross profit rate was 60.5%, flat to last year.
Commenting on the results, Abercrombie & Fitch CEO, Fran Horowitz, said, “We achieved our seventh consecutive quarter of positive comparable sales fuelled by ongoing strength at Hollister and a return to positive comps at Abercrombie. This contributed to top-line growth, operating margin improvement and a net loss reduction compared to last year.”
At the same time, Horowitz announced the closure of some stores. “We are focused on our transformation initiatives, with global store network optimisation being a key priority. We continue to believe in stores and are committed to delivering intimate, omni-channel brand experiences that closely align with our customers’ needs. In line with our strategy, we are announcing plans to close three additional flagship locations, bringing the total to five since 2017. Except for the charges from these flagship store actions, we remain on track to achieve our previously communicated fiscal 2019 outlook and continue to lay the foundation to achieving our fiscal 2020 targets.”
Among those that have closed since first quarter of 2017 to first quarter of 2019 are A&F flagship stores on Pedder Street, Hong Kong and Copenhagen, Denmark, respectively. SoHo Hollister flagship store in New York City is expected to close in the second quarter of fiscal 2019; Milan, Italy by the end of fiscal 2019; and Fukuoka, Japan in fiscal 2020.
On the other hand, Abercrombie & Fitch remains on track to deliver approximately 85 new experiences through new stores, remodels and right-sizes this year. These actions represent important ongoing steps in the company’s global store network optimisation efforts as it continues to pivot away from large format stores to smaller, omnichannel focused brand experiences.
Going forward, for fiscal 2019, Abercrombie & Fitch expects its net sales to be up in the range of 2-4%, driven by positive comparable sales and net new store contribution.