Abercrombie & Fitch isn’t in with the cool kids anymore.
The struggling mall retailer — whose CEO Mike Jeffries apologized in May for openly shunning overweight teen shoppers as he courted “cool kids” — warned full-year profits will miss Wall Street’s forecast on persistently sluggish sales.
Third-quarter revenue at the pricey preppy clothier tumbled 12 percent to $1.03 billion, missing expectations of $1.07 billion and dragging down shares more than 6 percent in after-hours trading Tuesday to $35.90.
Slated to hold a Wednesday meeting with analysts to discuss its long-term strategy, Abercrombie said it will close its 28 free-standing Gilly Hicks stores, although it will still sell the lingerie brand at its Hollister stores and online.
The closings will spur a pretax charge of as much as $100 million, and some investors say more Abercrombie stores should be shuttered as teens continue to defect.
Jeffries, who for years riled parents for running ads with scantily clad teen models, blamed the sales drop-off on weakness in “overall spending among younger consumers.”
The real reason, according to some analysts, is that Abercrombie’s styles have grown stale while lower-priced competitors like H&M and Forever 21 steal away its clientele.
Jeffries was noncommittal about the outlook for the crucial holiday season.
“Until we have seen a clear trend improvement, we are continuing to take a cautious approach into the fourth quarter,” he said in a statement
The retailer’s third-quarter sales from stores open at least a year fell 14 percent. The company forecasts this measure will fall by double-digits in the fourth quarter, and anticipates weaker margins as it clears out excess inventory.
Abercrombie expects to earn $1.40 to $1.50 per share for the year on an adjusted basis; analysts were anticipating $1.96 per share.