For Abercrombie & Fitch Co., 2011 will be remembered as the year the multichannel retailer of apparel and accessories for younger shoppers closed stores, incurred a drop in profits and posted a healthy gain in e-commerce revenue.
For the year ended Jan. 29, Abercrombie, No. 56 in the Internet Retailer Top 500 Guide reported:
- E-commerce sales increased 36.1% to $552.6 million from $406 million in 2010. Abercrombie includes shipping and handling in its e-commerce revenue, which it calls direct-to-consumer sales.
- Total sales grew 19.9% to $4.16 billion from $3.47 billion.
- Comparable-store sales increased 5%.
- Net income declined year over year 15.0% to $127.7 million from $150.3 million.
The web accounted for 13.3% of total sales compared with 11.7% in 2010.
For the fourth quarter:
- E-commerce sales increased 40.6% to $212.3 million from $151 million in Q4 2010.
- Total sales grew 15.7% to $1.33 billion from $1.15 billion in Q4 2010.
- Comparable-store sales were flat.
- Net income declined year over year 78.8% to $19.6 million from $92.6 million. The decline in profits included charges for impairments and write-downs of certain store-related long-lived assets and charges related to store closures and lease exits of $19 million, the company says.
The web accounted for 16.0% of total sales in the fourth quarter compared with 13.1% in Q4 2010.
“In addition to the 135 stores we have closed in the past two years, we have identified approximately another 180 stores for closure by 2015 based on current performance, which will bring our total closures to over 300 stores,” CEO Mike Jeffries told analysts on the company’s year-end earnings call. “We expect total capital expenditures for 2012 to be approximately $400 million.”
In 2011, Abercrombie opened 47 stores in international markets, but closed 71 stores in the U.S., including about 26 in the final quarter. “Our results for the fourth quarter were below our expectations in an extremely challenging environment,” Jeffries says. “However, we are confident that we are on track with our long-term strategy of leveraging the international appeal of our iconic brands to build a highly profitable, sustainable, global business. The overall economics of our business in Europe, in our U.S. tourist stores and in our direct-to-consumer business remain very strong."