A Growing Inventory Of Abercrombie & Fitch Could Mean Future Discounting

Abercrombie & Fitch Co (ANF.N) posted a sharp drop in profit and its first quarterly decline in sales at established stores in more than two years, leading to concern that a growing inventory could mean future discounting.
　　
While trading on above-average volume, Abercrombie & Fitch (ANF: 36.55, -2.95, -7.47%) slid today, hitting and then dropping past its previous 52-week low to $39.13. Trading at a volume of 8.2 million, the stock price is down 13.7%. The stock has been slipping in the last two months, down $12.94 (-24.8%) from a price of $52.13 on March 19, 2012. The stock is trading at 79.7% of its 50-day moving average and 77.3% of its 200-day moving average.
　　
The share price of Banco Santander (STD: 5.56, -0.11, -1.94%) sunk today, reaching and then dropping even further past its previous 52-week low of $5.79 to $5.67. The stock was trading on above-average volume. While trading at a volume of 33.9 million, the stock price has fallen 1.2%. The stock has been on a downward trajectory over the last two months, dipping $2.78 (-32.6%) from a price of $8.52 on March 19, 2012. The stock is trading at 86.7% of its 50-day moving average and 76.2% of its 200-day moving average.
　　
Same-store sales, or sales at stores open at least a year -- an important measure of retail growth -- fell 5 percent in the quarter, and the teen clothing retailer forecast a tepid year ahead.
　　
"While management didn't quantify international comparable sales ... we estimate total international comparables were down double digits," Paul Lejuez, an analyst with Nomura wrote in a note to clients.
　　
He noted this was the first negative quarterly comparable sales for the company's Hollister brand in Europe.
　　
Net sales rose 10 percent to $921.2 million, but even that missed estimates.
　　
Abercrombie said it ended the quarter with inventory up 44 percent, against the 10 percent rise in sales. Lejuez said that could signal more markdowns were on the way.
　　
Abercrombie said margins were expected to improve throughout the year, but if it had to resort to discounting while rivals were selling clothing at full price, it could affect margins.
　　
Warren Buffett’s Berkshire Hathaway Inc. disclosed in regulatory filings that it bought 10 million shares of the automaker’s stock.
　　
Abercrombie & Fitch Co., down $5.90 at $39.50
　　
Declining sales in established stores and in Europe pushed the teen retailer’s first-quarter net income down 88 percent.
　　
Chico’s FAS Inc., up 55 cents at $15.21
　　
The women’s clothing store chain said that its fiscal first-quarter net income climbed 17 percent as shoppers spent more money.
　　
Abercrombie & Fitch (ANF, $38.65, -$6.75, -14.87%) posted a sharp drop in fiscal first-quarter earnings as the teen-apparel retailer's same-store sales declined amid weak European sales. Sales increased more slowly than expected.
　　
Money-manager Legg Mason (LM, $24.89, +$2.51, +11.22%) hopes to enhance its financial flexibility by refinancing $1.25 billion of convertible senior notes and buying back more of its stock. The company expects to book an early debt-extinguishment charge of $70 million to $80 million in the fiscal first quarter and said the efforts will reduce its gross debt by $350 million immediately. Legg Mason's board approved $1 billion for stock repurchases.
　　
Skechers USA Inc., down 42 cents at $17.85