Abercrombie Fourth-Quarter Profit Triples

Friday, 22 Feb 2013 08:47 AM

 

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Abercrombie & Fitch Co., the teen retailer with more than 800 namesake and Hollister Co. stores, said fourth-quarter profit more than tripled amid rising international sales.

Net income, calculated using a new system for valuing inventory, advanced to $157.2 million, or $1.95 a share, from a restated $45.8 million, or 52 cents, a year earlier, the New Albany, Ohio-based retailer said today in a statement.

Abercrombie has been working to improve its fashion assortment and close underperforming U.S. stores while expanding internationally. The company likely benefited from lower cotton costs and improving sales in Europe in the fourth quarter, Randal Konik, an analyst at Jefferies Group Inc., wrote in a note before the results were announced.

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Fourth-quarter sales rose 11 percent to $1.47 billion. The average estimate of analysts surveyed by Bloomberg was $1.49 billion. International sales rose 34 percent to $492.2 million.

Abercrombie changed its method of accounting for inventory in the quarter. Under the old method, the company valued inventory based on its weighted average cost and initial retail selling price, then recorded charges to the cost of goods sold when the selling price was reduced. In the new system, the company doesn’t reduce the value of inventory unless it expects to sell the merchandise below its original cost.

Under the previous method of accounting, fourth-quarter net income rose to $173.2 million, or $2.15 a share, from $19.6 million, or 22 cents, a year earlier.

The retailer also boosted its quarterly dividend by 14 percent to 20 cents a share, from 17.5 cents. It’s payable March 19 to shareholders of record as of March 4.

The shares rose 4 percent to $51 at 8:04 a.m. in New York. The stock added 2.3 percent this year through yesterday, compared with a 6.2 percent gain for the Standard & Poor’s 500 Retailing Index.

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