Feb 16, 2011
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Abercrombie & Fitch boosts int'l plans, Q4 tops

Feb 16, 2011

Abercrombie & Fitch
Feb 16 - Abercrombie & Fitch Co posted a bigger-than-expected quarterly profit as discounts brought in more traffic and boosted sales, and the teen retailer said it plans to almost double its capital expenditures this year as it ramps up international expansion.

Abercrombie, once a high-flyer among teens and college-going adults, has been in a slump for the past year and has shut underperforming stores in the United States as it looked to international markets to drive growth.

The retailer, which also operates the Hollister, abercrombie kids and Gilly Hicks stores, said it plans to spend to spend about $300 million in 2011, mostly on international stores. It spent around $161 million last year.

"We're looking to accelerate the pace of international Hollister openings to approximately 30 to 40 this year," Chief Executive Mike Jeffries said on a conference call with analysts.

The company will open its first Hollister stores in mainland China and Hong Kong, and expects to open Abercrombie & Fitch flagship stores in Paris, Madrid, Dusseldorf, Brussels, Dublin and Singapore. Hollister is Abercrombie's surf-inspired chain.

Abercrombie also said it plans to increase prices on some items this year, and is looking to scale back on deep discounts as the economy recovers.

Though growth in sales at U.S. retailers slowed in January, it was partly because of harsh winter weather across much of the country, and the underlying trend remained supportive of an acceleration in the economy. Consumer spending accounts for 70 percent of U.S. economic activity.

Abercrombie, which competes with peers like Aeropostale Inc and privately held Forever21 in the competitive and often fickle teen apparel market, has lowered prices to spur demand and has been successful in gaining some market share of late.

The company had earlier posted a 13 percent rise in same-store sales in the fourth quarter and a 23 percent increase in total sales to $1.15 billion.

While international sales rose 61 percent, the company saw a 16 percent rise in domestic sales.

For the fourth quarter, Abercrombie earned $1.38 per share on an adjusted basis, while analysts on average had been expecting earnings of $1.32 per share, according to Thomson Reuters I/B/E/S.

Shares of the company were up 6 percent at $56.50 in early morning trade on Wednesday on the New York Stock Exchange.

(Reporting by Nivedita Bhattacharjee; Editing by Anne Pallivathuckal)

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