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Direct Sales Bright Spot For Abercrombie & Fitch

By Nov 16, 2009

Total sales at Abercrombie & Fitch fell $896.3 million during third quarter 2008 to $765.4 million in third-quarter 2009. But the apparel marketer’s direct sales can’t be blamed for this slip: While comparable store sales were dropping by 22%, direct sales rose 11% over third-quarter 2008’s levels.

During the most recent quarter, the company recorded net income of $38.8 million, down from $63.9 million a year ago. The quarter ended Oct. 31.

Direct sales rose to $63.9 million – coincidentally the same as third-quarter 2008’s net income. The company’s flagship Abercrombie & Fitch stores saw their sales fall 18%, while its Abercrombie Kids store net sales dropped 22%. Its Hollister Co net sales were down 26% among comparable stores.

Marketing, general and administrative expenses, which at just under $105 million amounted to 11.7% of sales a year ago, clocked in at $88.1 million, or 11.5% of sales for the quarter just ended. The company did not detail the cuts in its marketing programs.

The company’s operating income slipped to $30.4 million (4% of sales) down from $100.1 million (11.2% of sales) a year ago.

But the company reaped an $8.9 million tax benefit during the most recent quarter, compared to $36.8 million in tax expenses during third-quarter 2008.