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Omar Venerio
Articles (1507) 

European and US Markets Red on Wednesday

Abercrombie & Fitch falls on 1st-quarter results

U.S. stocks were in negative territory on Wednesday, extending the previous day's losses. The Dow Jones Industrial Average fell 1.09% to 25,070, the S&P 500 index declined 0.80% to 2,779 and the Nasdaq Composite Index slid 0.77% to 7,549.

Shares of Abercrombie & Fitch Co. (NYSE:ANF) plunged more than 25% on Wednesday after the company announced first-quarter results. Revenue grew 0.4% from the prior-year quarter to $733.97 million, beating expectations by $3.18 million. A loss of 29 cents per share also topped estimates by 14 cents.

"We achieved our seventh consecutive quarter of positive comparable sales, fueled by ongoing strength at Hollister and a return to positive comps at Abercrombie," CEO Fran Horowitz said. "This contributed to top-line growth, operating margin improvement and a net loss reduction compared to last year."

During the quarter, the gross profit margin was 60.5%, flat when compared to the year-ago quarter. The operating margin inched up 210 basis points to 3.7%

Looking ahead to the second quarter, the company expects net sales to be flat to up 2%, with comparable sales not growing. It also projects the gross profit margin to be down 100 basis points from 60.2%.

For the full year, the company projects net sales to grow between 2% and 4%, driven by positive comparable sales and net new store contribution. The gross profit rate is expected to surpass 60%. The company plans capital investments of $200 million.



Global markets

The main European stock markets traded deep in the red. The U.K.'s FTSE 100 tumbled 1.15%, France's CAC 40 retreated 1.70%, Germany's Dax fell 1.57% and Spain's IBEX 35 slid 1.21%.

In Asia, Japan's Nikkei 225 fell 1.21%, India’s BSE Sensex slipped 0.62%, Hong Kong's Hang Seng swelled 0.57% and China's Shanghai Composite rose 0.16%.

Disclosure: The author holds no positions in any stocks mentioned.

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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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