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Gloucestershire Business News

Fashion retailer Abercrombie and Fitch predicts sales may flatline this year

Trendy clothing brand Abercrombie and Fitch suffered almost an £8million operating loss in the first four months of the year.

The American retailer, which has eight UK stores, predicts sales may flatline this year due to the impact of inflation and foreign currency, reports Retail Sector.

It was expecting an increase of up to four per cent on its $3.7bn (£2.95bn) net sales in 2021 but has reduced this to 0-2 per cent.

Net sales are also forecast to be down low-single-figures in the second quarter following Covid-related lockdowns in China, higher freight and raw material costs, and inflationary pressures.

In the company's latest trading update, it reported an operating loss of $10m (£7.98m) for the first quarter, compared to operating income of $57m (£45.51m) last year.

Additionally, the retailer's gross profit rate declined 55 per cent year-on-year due to $80m (£63.88m) of higher freight costs.

Operating expenses were up five per cent compared to last year, with half of the increase due to the lapping of Covid-related rent abatements and payroll credits last year, and the other half due to an increase in marketing and digital fulfilment expenses.

However, the retailer reportedly delivered its highest Q1 net sales since 2014 with growth of four per cent to $813m (£649.23m), compared to $781m (£623.68m) in the same period last year.

Fran Horowitz, chief executive officer, said: "Looking forward, we expect higher costs to remain a headwind through at least year-end.

"We will continue to manage expenses tightly and are committed to finding opportunities to offset these costs while protecting strategic investments in marketing, technology and our customer experience, which should drive sustained, long-term sales growth."

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