Abercrombie & Fitch Company stock fell 14% on Tuesday after the company warned of production and delivery delays and higher expenses in the current quarter, citing a drop in profitability in the three months ending October 30.
Analysts projected a stronger outlook at the start of the holiday season, but the thought of further openings and returning to work dampened optimism for the casual wear shop.
Supply chain expenditures reduced the company's gross profit margin by 30 basis points year on year in the third quarter, to roughly 64%. This was attributed to freight inflation and efforts to mitigate supply chain difficulties, according to the company.
The company's board of directors authorized a $500 million share repurchase, but this did little to arrest the stock's decline.
Digital net sales increased by 8% year on year, accounting for 46% of overall third-quarter sales of $905 million, which increased by 10%.
According to CEO Fran Horowitz, the start of the holiday season has been positive, with customers coming out early to shop and responding well to assortments.
Profit per share of 86 cents was higher than expected.