Abercrombie&Fitch takes hit from exchange rates in the second quarter

Weaker sales and currency headwinds drove Abercrombie&Fitch into deep losses in its latest quarter, with sales expected to remain challenging over the remainder of the year.

Net sales dropped by 4% to $783.2m (consensus: $783m) over the three month to 30 July, with like-for-like sales - which are calculated on a comparable basis - down by by 4% (consensus: -4.2%).

In non-GAAP terms, the company registered a net loss of $16.8m, versus $8.6m last year.

Proforma losses per share climbed to 25 cents, against 12 cents for the comparable period of 2015.

Exchange rate headwinds cut the company´s quarterly EPS by eight cents.

By geographies, net sales Stateside for the second quarter fell 7% to $478.8m and were roughly flat at $304.4m overseas, when compared with a year ago, with the company´s boss, Arthur Martinez, attributing the brunt of the fall to its flagship and tourist locations.

Direct-to-consumer or digital sales on the other hand accounted for 23% of the company total in the latest period, in comparison to approximately 21% last year.

On a constant currency basis, and excluding certain items, the firm´s gross margins shrank by 20 basis points to 60.9%.

Regarding the outlook for fiscal 2016, the company expected sales to remain "challenging" through the second half of the year, with fluctuations in exchange rates expected to knock about $25m off its sales and another $20m from operating profits - with the third quarter expected to mark the low point.

As of 1621 BST shares in the company were down by 20.13% to $18.75, wiping out their year-to-date gains.