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Abercrombie & Fitch Tops Estimates

Shares of Abercrombie & Fitch rose Wednesday after the clothing retailer beat analysts' expectations by a large margin with third-quarter earnings of 47 cents per share.

BancBoston Roberston Stephens also repeated its 'strong buy' rating for the stock.

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Abercrombie & Fitch (ANF)
Analysts surveyed by First Call expected the company (ANF) to earn 35 cents a share. Abercrombie & Fitch said third-quarter earnings per share increased 135 percent compared to 20 cents per share in the year-ago quarter. Likewise, the company said its net income increased 140 percent to $24.9 million, compared to $10.4 million in the year-ago period.

Abercrombie & Fitch said its operating income was up 122 percent to $40.8 million in the third quarter from $18.4 million in the quarter a year ago. Its operating expenses and general administration costs were $48.7 million vs. $34.6 million in the year-ago quarter.

Net sales for the quarter were $229.9 million, a 55 percent increase, compared to $148.5 million in the year-ago period, the retailer reported. Comparable-store sales also increased by 35 percent during the third quarter.

The company also released its year-to-date numbers in a statement. Net income for the year increased 221 percent to $41.8 million vs. $13 million a year ago. Net sales for the year to date rose 65 percent to $511.2 million, compared to $309.5 million.

Overall, comparable store sales increased 41 percent year-to-date. Operating income year-to-date was also up 173 percent to $68.2 million vs. $25 million for the year-ago period.

Abercrombie & Fitch runs 177 clothing stores.

In other retail earnings:

Federated Department Stores, the operator of Macy's and Bloomingdale's, beat Wall Street estimates for third-quarter profits despite a drop-off in sales.

Excluding onetime charges, the retailer said it earned $110 million, or 50 cents a share, up 4 percent from $105 million, or 47 cents, a year earlier. That beat estimates of analysts surveyed by First Call Corp. by a penny.

Sales, however, slipped 2.7 percent to $3.65 billion from $3.75 billion. Ecluding the specialty store division, which was sold at the end of July, sales declined 1.3 percent from a year earlier. On a comparable-store basis, sales decreased 1.3 percent in the third quarter.

"This has been a difficult quarter, so we are pleased that we were able to generate improved earnings growth despite disappointing sales in the last two months,'' said James M. Zimmerman, Federated's chief executive.

The company was able to boost earnings in share in large part from lower interest expenses and a share buyback program.

Overall, Federated earned $87 million, or 40 cents a share, in the latest quarter when including a $23 million after-tax charge related to the completion of its tender offer for the majority of its 10-percent senior notes due 2001.

Written By Janet Haney

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