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Fashion retailer shares nosedive after earnings

Nose dive, down financials
Charles Schug | Getty Images

As fashion retailers look for better results in the fall and holiday seasons, shares of Abercrombie & Fitch and G-III Apparel plummeted Tuesday after the companies reported quarterly earnings that disappointed. DSW shares dropped, as well, even after the company posted earnings Tuesday that beat analysts' estimates.

Abercrombie & Fitch

Shares of Abercrombie & Fitch plunged more than 20 percent Tuesday after the teen apparel retailer posted a 14th-straight quarterly decline in sales, in part by low traffic to its flagship and tourist stores. The company does not expect results to improve this year.

"Flagship and tourist locations continued to account for the vast majority of the comparable sales decline as traffic remained a significant headwind," Arthur Martinez, executive chairman of Abercrombie, said in a press release.

Comparable sales at Abercrombie stories open at least a year fell 4 percent in the quarter, versus the expected 4.2 percent decline, according to Consensus Metrix.

"Comparable sales [will] remain challenging through the second half of the year, with a disproportionate effect from flagship and tourist locations," the company said in a statement.

The fashion retailer reported fiscal-second-quarter earnings with a loss of 25 cents per share on revenue of $783 million. Analysts had expected a loss of 20 cents a share on revenue of $783 million, according to Thomson Reuters.

The firm Cowan and Co. lowered the company's previous target price to $22 from $22.95.

"We appreciate in-store changes, more significant brand differentiation between Hollister and Abercrombie banners, and improved inventory control," analyst Oliver Chen said in the report, "however, changes will take time as the company needs to generate renewed awareness and traffic. We do believe the composition of inventory buys, product and store presentation, and fashion is better."

Abercrombie's stock is down 32 percent year-to-date.

ANF 2016 Chart

G-III Apparel

Shares of G-III Apparel tanked more than 20 percent after the company posted quarterly earnings and revenue that missed analysts' expectations.

The retailer reported fiscal-second-quarter earnings of 1 cent per share on revenue of $442 million. Analysts had expected profit of 18 cents a share on revenue of $485 million, according to Thomson Reuters.

"We believe that the risk of continued softness in the retail outlet environment has somewhat abated, as we have now liquidated inventory from last year's holiday season and are currently adding some great new fall products to our store inventory," Morris Goldfarb, president and CEO, said in a press release.

Additionally, he said the company believes cool weather trends should be in the retailer's favor this fall and holiday season compared to last year.

The company revised its prior guidance for the fiscal full year. It expects net sales of approximately $2.48 billion and net income between $102 million and $106 million, or between $2.16 and $2.26 per diluted share. Previously, the company said it expected net sales of $2.56 billion and net income between $120 million and $125 million, or between $2.55 and $2.65 per diluted share.

Also, the company reduced its EBITDA for fiscal 2017 to between approximately $199 million and $206 million from $228 million and $236 million.

GIII 2016 Chart

DSW

Shares of DSW briefly rose and then dropped more than 10 percent Tuesday after the company posted its fiscal second-quarter earnings.

The company reported fiscal-second-quarter earnings of 35 cents per share on revenue of $659 million. Analysts had expected 30 cents a share on revenue of $658.7 million, according to Thomson Reuters. Comparable sales for the quarter declined 1.4 percent.

"We've positioned fall inventories conservatively to chase the trend of the business," Roger Rawlins, CEO of DSW, said in a press release, "and after conducting a comprehensive assessment of DSW's cost structure we've identified actions, most of which will benefit 2017, with approximately $25 million in annualized cost savings."

Comparable sales at stores open at least a year fell 1.2 percent, versus the expected 2.8 percent decline, according to Consensus Metrix.

DSW reaffirmed its full-year earnings guidance between $1.32 and $1.42 The company's board approved a quarterly dividend of 20 cents a share.

With Tuesday's losses, DSW shares are down 2 percent year to date.

DSW 2016 Chart

— Reuters contributed to this report.