Abercrombie & Fitch sees sales turnaround

Preppy teen apparel retailer Abercrombie & Fitch on Thursday posted a surprising 8 percent increase in January sales in stores open at least one year, helped by a gift-card promotion and winter clearance sale.

It was the first month-over-month increase since April 2008, and shares rose 6 percent.

Analysts surveyed by Thomson Reuters, on average, expected sales in stores open at least one year to fall 8.3 percent.

Results were boosted by a three month gift-card promotion in most of the company's North American stores. Beginning Thanksgiving, customers received a $25 gift card if they spent at least $100 in stores, redeemable until Jan. 30.

At the beginning of the fiscal month, $22 million in gift cards were issued but not redeemed, but by the end of the month "substantially all" of the gift cards had been redeemed.

The promotion drove shoppers into stores who might not otherwise have purchased items. In addition to the gift card promotion, a monthlong winter sale and clearance event helped results, Abercrombie said.

Abercrombie has struggled with falling sales for two years as consumers have cut back and headed to lower-priced competitors like American Eagle and Aeropostale.

The company said total sales for the four-week period ended Jan. 30 rose 16 percent to $222.8 million.

For the fourth quarter, sales in stores open at least one year fell 13 percent, while total sales fell 5 percent to $951 million.

In fiscal 2009, sales in stores open at least one year fell 23 percent and total sales fell 16 percent to $2.98 billion.

Abercrombie said it closed its struggling higher-priced brand Ruehl as of Jan. 30.

The company said it expects to take an impairment charge in the fourth-quarter related to a review of its assets. It reports forth-quarter and full year results on Feb. 16.

Sales at stores open at least a year are a key measure of retailer performance because they measure growth at existing stores rather than from newly opened ones.

Shares rose $1.78 , or 5.5 percent, to $33.52 during morning trading. The stock has traded between $16.95 and $42.31 during the past 52 weeks.