Shares of Abercrombie & Fitch fell more than 30% after the teen apparel retailer, once known for its skimpy-wearing models, lowered its financial forecast, citing disappointing sales and rising costs. .
The mall-based chain, which also owns Hollister and Gilly Hicks, downgraded its sales outlook for the year, saying revenue was flat, or up 2%, compared to its previous forecast of 2% to 4% growth. Will be
Wall Street was expecting growth of 3.5%. The retailer reported a loss of $14.8 million for the quarter ended April 30.
“Looking forward, we expect higher costs to remain a headwind, at least through the end of the year,” Chief Executive Fran Horowitz said in a statement. “We will continue to strictly manage expenses,” he added.
The company attributed the loss to its rising costs as inflation hit a 40-year high. It’s hardly alone that consumers are spending more carefully, as other major retailers including Walmart, Target and Kohl’s.
Pointing to a 45% increase compared to a year ago, the company said the slowdown in spending is contributing to A&F’s inventory buildup.
The New Albany, Ohio-based company’s total sales rose 4% in the quarter to $781 million, while Hollister sales were down 3% from a year ago and Abercrombie & Fitch sales rose 13%.
Horowitz, who has been CEO since 2017, was responsible for reducing sexual marketing at the company, which was led by his predecessor, Mike Jeffries. She shunned bare-chested male models, added plus-size models, and leaned into the “body positivity” movement.
Jeffries embraced commercials featuring muscular, shirtless men and a quarterly magazine that some considered soft-porn.
In March, Netflix released a documentary called “White Hot: The Rise and Fall of Abercrombie & Fitch” in the late 1990s and early 2000s.