Abercrombie & Fitch (NYSE:ANF) has announced that it will be closing 60 more U.S. stores this fiscal year. The closures follow the shuttering of 53 stores across the nation last year. The company has closed hundreds of stores over the past five years. The new closings will mean Abercrombie will have roughly 670 stores this year, down from 839 five years ago.
The company may have the flexibility to exit even more locations in the near future without incurring hefty charges. Half of the company’s more than 700 U.S. leases are up for renewal by the end of fiscal 2018. However, the past closures have not yet translated into an improvement in sales at surviving locations. The company reported its 16th straight quarterly decline in the fourth quarter.
The company’s same-store sales fell 5 percent in the fiscal fourth quarter, a slight improvement from the prior quarter. Weak traffic at Abercrombie’s flagship and tourist locations drove a decline in overall comparable sales. The namesake brand reported comparable sales fell 13 percent in the quarter.
However, the Hollister brand reported its first quarter of comparable sales growth in a year. The company has been remodeling Hollister stores and hiring top designers in teen fashion. The investments appear to be paying off. Hollister reported a surprise 1 percent rise in comparable sales, compared with the 0.7 percent decline analysts had expected. Hollister now makes up about 57 percent of Abercrombie’s net sales.
Net income attributable to Abercrombie & Fitch fell to $48.8 million, or 71 cents per share, in the fourth quarter, from $57.7 million, or 85 cents per share. On an adjusted basis, the company earned 75 cents per share, in line with analysts’ expectations. Net sales fell nearly 7 percent to $1.04 billion, slightly lower than analysts’ expectations of $1.05 billion. Abercrombie’s shares rose 7 percent to $12.50 in premarket trading on Thursday.
Abercrombie & Fitch is actively searching for ways to boost productivity amid ongoing sales declines. The company is also testing changes to its marketing strategy to minimize the number of sales it gives up when it shutters a location. One bright spot has been its e-commerce efforts. Nearly one-third of its sales are generated online now, up from 28 percent last year.