September 4, 2009 / 3:40 PM / 9 years ago

UPDATE 1-Citigroup cuts Abercrombie & Fitch to sell

Sept 4 (Reuters) - Citigroup cut teen apparel retailer Abercrombie & Fitch Co (ANF.N) to “sell” from “hold,” saying sales shortfalls at the company will likely lead to continued negative earnings revisions.

“ANF is experiencing deteriorating same-store sales due to problems beyond pricing and newness as ANF’s proactive promotional stance during the back-to-school shopping season does not appear to be driving improved sales results,” analyst Kimberly Greenberger said in a note to clients.

On Thursday, the retailer, which runs its namesake stores and the Hollister and Gilly Hicks chains, had reported a wider-than-expected August same store sales decline of 29 percent. [ID:nWNAB6364]

“We are also incrementally concerned due to August weakness in key back-to-school items, including graphic tees, knit tops, and denim, which does not bode well for second half of the year,” Greenberger added.

The analyst, who cut the price target on the stock to $24 from $33, said the company also appears late compared with competitors at securing lower product costs.

Shares of the retailer were down 5 percent at $29.39 Friday morning on the New York Stock Exchange. (Reporting by Vidya Lakshmi in Bangalore; Editing by Pradeep Kurup)

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