Abercrombie In Fashion As Results Lift Shares

Abercrombie & Fitch (NYSE: ANF - news) cut a dash on Wall Street as shares rose by 20% after it slowed quarterly sales declines and more than doubled profits.

The preppy fashion label has struggled to cope with changing consumer tastes and competition from upstart rivals such as H&M and Zara in recent years, and sales have fallen for 11 quarters in a row.

But it has hired designers from the likes of Ralph Lauren and Tommy Hilfiger to help breathe new life into its Abercrombie brand as well as changing music and lighting in stores and updated its range with denim and floral styles in recent months.

Comparable sales in the three months to the end of October were still 1% down but this was well ahead of market expectations for a 2.4% decline, and marked another improvement.

A 3.6% fall in total revenue to $879m (£578m) was also not as bad as expected. Net (LSE: 0LN0.L - news) income more than doubled to $42m (£28m).

The bottom line was boosted as it reduced promotions and improved stock controls, lifting the group’s profit margin.

Abercrombie said it sold more items at full price during the quarter.

Its Hollister brand led the way, with comparable sales up 3%.

The sales figures for the group looked favourable coming a day after Gap revealed a 4% decline at its own-brand stores.

Abercrombie’s executive chairman Arthur Martinez said: "Our third quarter results exceeded our expectations coming into the quarter and provide the strongest validation that our initiatives are working."

He said the company remained cautious over the current quarter though it expects sales to be flat for the period – which would be a further improvement in its performance.

The group operates 965 stores including 790 in the US and 34 in the UK.