It's been a tough summer for many retailers, that's for sure. However, certain retailers appear to be persevering very nicely, and Abercrombie & Fitch
Abercrombie's second-quarter net income increased 14% to $65.7 million, or $0.72 per share. Total sales increased 15% to $658.7 million. Although same-store sales for the quarter were flat, it was up against very tough comparisons -- comps last year at this time had risen 30%, so there's no reason to beat up on Abercrombie on that point. Gross profit increased as well, to 69.1%. (Its June swoon was apparently short-lived.)
There was a lot of strength in some of its other fashion concepts, too, all of which are expected to drum up additional growth for the retailer. For example, net sales at Hollister, its West Coast, surf-inspired apparel store that arguably competes with the likes of Pacific Sunwear
I've had my doubts about Abercrombie in the past, and in truth, I have some philosophical problems with the company and some aspects of its brand, but it's pretty clear that it continues to be a leader with young people. However, I'm still not convinced that Abercrombie won't face an inevitable slowdown at some point, given its historical ups and downs.
On the other hand, Abercrombie's newer concepts and how they are resonating with the youth market will be an interesting element to watch -- so far there seem to be good signs in that direction. Meanwhile, despite the fact that it's been such a tough summer for many of Abercrombie's retail peers -- Aeropostale
Abercrombie's shares have shot up following the earnings report; on my last check they were up more than 10%. It's understandable, seeing how Abercrombie has bucked the trend in what has proven to be a summer of discontent for many retailers. Although I personally wonder how long Abercrombie can keep up its momentum, I have to admit, it seems to be weathering the recent storm quite well in comparison to many of its peers.
Alyce Lomax does not own shares of any of the companies mentioned.