Abercrombie 4Q earnings rise 20 pct.

Abercrombie & Fitch Co. said Wednesday that its fourth-quarter earnings jumped 20 percent, powered by strong sales as the teen retailer continues to expand its Hollister line of stores that cater to teens with surfer-inspired looks.

But the company said its earnings for the first half of this fiscal year would match or come in slightly below Wall Street estimates. Abercrombie shares slid about 3.6 percent in after-hours trading.

Abercrombie said it made $198.2 million, or $2.14 per share, for the quarter ended Feb. 3 compared with profits of $164.6 million, or $1.80 per share, a year ago. Sales rose 18 percent to $1.14 billion from $960.4 million a year ago. Sales at stores open at least a year, considered a key indicator of a retailer's health, fell 3 percent after jumping 28 percent a year ago.

Analysts surveyed by Thomson Financial expected earnings of $2.14 a share on revenue of $1.1 billion.

The results were released after the New York Stock Exchange was closed. Abercrombie shares ended the day at $82, down 64 cents. Shares fell $2.99 to $79.01 in trading after hours.

Abercrombie shares have been trading near their record high of $83.82. The shares have been as low as $49.98 in the past year.

Hollister sales rose 33 percent in the fourth quarter to $476.8 million compared with an increase of just 6 percent to $504 million at its flagship Abercrombie & Fitch stores. Abercrombie had 390 Hollister stores at the end of January, 82 more than a year ago.

The company forecast profits of $1.47 to $1.52 per share for the first half of this fiscal year, a 10 percent to 13 percent increase over the first half of 2006. Analysts were looking for profits of $1.52 per share.

The company said the costs of opening a store in London along with difficult comparisons to last year's tax rate would keep earnings growth in the mid-single digit range in the first quarter. It also expects to spend at least $6 million more because of minimum wage increases, especially in the second half of the year.

The London store is expected to open next month, and the company said it might have to increase prices there to offset higher building and wage costs overseas but hopes for sales comparable to its flagship New York store.

"Its location will be a draw for both local and tourist customers," President and Chief Executive Michael Jeffries said in a call with analysts.

The company said it has high hopes for expanding Hollister overseas too, but that won't happen this year.

Profits included $3.5 million from gift cards sold but never redeemed, the company said.

For the year, the company said sales increased 19 percent to $3.3 billion from $2.8 billion the previous year. Profits for the year rose to $422.2 million, or $4.59 per share, a 26 percent increase from $334 million or $3.66 per share. The most recent fiscal year had 53 weeks, one more week than the previous year.

Besides the Hollister stores, the company, based in this Columbus suburb, operates 357 Abercrombie & Fitch stores, 177 abercrombie stores for children and 14 RUEHL stories in the United States. It also has six stores in Canada.

source:www.abercrombie.com