Abercrombie & Fitch shares fall as store closures threaten holiday sales

Pedestrians are reflected in the window of an Abercrombie & Fitch store in New York.Craig Warga | Bloomberg | Getty ImagesThe possibility that Abercrombie & Fitch will face additional rounds of temporary store closures due to rising Covid-19 cases sent the retailer’s shares down Tuesday, despite it reporting an earnings beat, as investors feared the shutdowns could threaten Abercrombie’s key holiday shopping season.Abercrombie is now calling for sales in the fourth quarter to fall 5% to 10%, which would be a steeper decline than in its latest period.Shares were down about 3% in late-morning trading.CEO Fran Horowitz told CNBC in a phone interview that the company has a plan in place to soften any blow from the closures. That’s something no retailer was able to attest to in March, when the pandemic first shuttered stores in an unprecedented attempt to halt the spread of the coronavirus.”We’ve been managing through this honestly all year now, so we’re understanding what it means,” Horowitz said. “Eighty percent of our stores in California were closed during back-to-school this year. … We’ve created a playbook.”The retailer has learned how to keep a tighter control on its inventories and run a smoother business online, as web sales ramp up, she said. Abercrombie’s digital sales were up 43% during the fiscal third quarter, driven by demand for its loungewear and cozy accessories.In the quarter ended Oct. 31, the company earned 76 cents per share after excluding one-time items. Net sales fell 5% from a year ago to $819.7 million. Both earnings and sales topped estimates. According to Refinitiv, analysts expected Abercrombie to breakeven on sales of $739.36 million.The global health crisis is also impacting Abercrombie’s business outside of the United States. As of Monday, roughly half of its stores in the Europe, Middle East and Africa region are closed due to lockdown restrictions, the company said. Four locations are dark in the U.S.The seven-day average of daily new Covid infections in the U.S. stands at 172,118 as of Monday, according to a CNBC analysis of Johns Hopkins University data, marking an all-time record.

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